I know of the credit works - I've read the bill. The best source is the primary source -
https://www.congress.gov/bill/117th-...%5D%7D&r=1&s=1
I also know that industry was sitting at the table when this was being written - just as it was for NAFTA and the newly named USMCA. For USMCA there were content requirements that sounded hard but were actually easy. The biggest thing was doing the new paperwork to document what we were already doing. This is a bit harder but not impossible. As always the devil is in the details and what really matters is how the regulations are written. The bill is an outline and leaves it to regulators to write the details.
If the content % is written like NAFTA and USMCA it will be based on dollar values not part count or weight. That helps to boost the NA part content a lot as things are just more expensive to make here. You import a $10 raw casting, CNC machine it, and now it is a $100 housing.
I can't stress enough how important the two things I highlighted in my post above are. First - adding countries with free trade agreements in addition to just North America. We have a trade agreement with Chile. They are the 2nd largest lithium producer in the world. We have a trade agreement with Australia - they mine all sorts of minerals including key battery materials like lithium, nickel, and copper. We have a trade agreement with Korea - 3 of the largest battery manufacturers are based there. For minerals the use of OR instead of AND is huge. That opens up the entire world except for "Foreign entities of concern". We don't need giant lithium mines in the USA to meet the sourcing requirements.
The "Foreign entities of concern" will require the biggest supply chain changes. Again, it depends on how the regulations are written and how far back they go. If they only go back to tier 1 or 2 it won't be that bad. If they go ALL the way back to every pin and connector in a harness from a tier 5 supplier that will be more difficult - but still doable.
The auto industry is geographically diverse but dominated by large international companies with production facilities all over the world. It helps that the US is less than 10% of global EV sales. So LG sends Chinese components to the EU and EU components to the USA. No different than some swaps made after USMCA. Engines are made in multiple facilities and some companies had to send US built engines to Mexico or Canada final assembly plants and Mexican or Canadian built engines to US final assembly plants. All the factories kept making what they were making but instead of shipping the engine next door they had to send it hundred or thousands of miles to a different assembly plant to make the content percentages work out. Less efficient for sure but way better than paying a 25% tariff. The same type of thing will happen with battery components and minerals.
I predict the automakers with NA vehicle and battery assembly plants will be fine as long as they didn't pick a Chinese battery partner. If a company picked CATL or BYD they will be in trouble.
Finally - the auto industry ALWAYS cries wolf at any new regulation - and then we meet it and move on. Happens with fuel economy, safety, emissions, USMCA - etc. This won't be any different but will current supply chains it may take a few years. $7500 is a pretty powerful motivator - which is the point.
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