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Yellen touts battery investments in Tennessee after Biden speech

2023-02-08T15:21:58Z

U.S. Treasury Secretary Janet Yellen speaks during her interview with Reuters in New Delhi, India, November 11, 2022. REUTERS/Altaf Hussain

U.S. Treasury Secretary Janet Yellen visits an electric vehicle battery plant in Tennessee on Wednesday, touting the U.S. clean energy investments enabled by President Joe Biden’s climate legislation just hours after Biden did the same in his State of the Union address.

The trip to a General Motors (GM.N) and LG Energy Solution (373220.KS) joint venture facility under construction near Nashville also comes a day after Yellen heard more pleas from French and German ministers not to exclude their companies from tax incentives in the Inflation Reduction Act.

Biden said the act, passed only by his fellow Democrats last year, would help rebuild the U.S. manufacturing base in a speech that served as a blueprint for an expected 2024 re-election bid. He also touted bipartisan infrastructure and semiconductor investment laws.

“We’re going to make sure that the supply chain for America begins in America,” Biden said.

The 2.8 million-square-foot (260,130-square-meter), $2.6 billion Ultium Cells plant in Spring Hill, Tennessee, is set to begin production later this year and is the second of three planned Ultium JV plants. It is expected to eventually employ 1,700 people and will produce cells for the Cadillac Lyriq sport-utility vehicle, which is assembled at a nearby General Motors Co (GM.N) plant.

“The Inflation Reduction Act is offering meaningful tax credits to spur clean energy investment and production. Importantly, the law deliberately encourages place-based investments,” Yellen said in excerpts of remarks for delivery at the Ultium Cells plant.

But European and Asian allies have complained that the Inflation Reduction Act’s tax subsidies will pull green investments away from those regions toward the United States. The European Union is readying its own competing incentives, and French Finance Minister Bruno Le Maire told reporters on Tuesday in Washington that U.S. officials agreed that the two sides should be transparent about their subsidies.

Le Maire also said that U.S. rules on the tax credits, now being finalized by Yellen’s staff, should be made available to a “maximum” of European components.

The U.S. Treasury has already tweaked some rules to make more electric vehicles eligible for up to $7,500 tax credits — including the Lyriq — by revising how they are classified.

The Treasury announcement allowed vehicles that automakers consider crossover SUVs to qualify for credits. The decision raises the retail price cap to $80,000 from $55,000 for GM’s Cadillac Lyriq, Tesla’s (TSLA.O) five-seat Model Y, Volkswagen’s ID.4 (VOWG_p.DE), and Ford’s (F.N) Mustang Mach-E and Escape Plug-in Hybrid.

The Treasury drew the ire of Senate Energy Committee Chair Joe Manchin after the department said it would not issue proposed guidance on battery sourcing rules until March, effectively giving some EVs not meeting new requirements a few months of eligibility in 2023 before the battery rules take effect.

The tax incentives are designed to shift the U.S. battery supply chain away from China. China currently produces 70% of batteries for electric vehicles, the Treasury said.

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