BYD’s Board Secretary Responds to Rumored US Ban on Chinese Batteries
On the evening of September 14, a rumor that the Inflation Reduction Act recently passed by the United States government will ban Chinese batteries after 2024 spread wildly on Chinese social media. The potential policy was then repudiated by the Secretary of the Board of BYD, a Shenzhen-based electric vehicle and battery giant.
According to relevant provisions of the act, the US government will issue tax credits of $7,500 and $4,000 to consumers who buy new and second-hand EVs, respectively, provided that the final assembly of vehicles is carried out in the US or a country that has signed a free trade agreement with the US. More than 40% of raw materials used to build the EV’s batteries must come from North America, the act added.
In another part, the new law apparently stipulates that from 2024, battery components produced in China will be completely banned, and from 2025, mineral raw materials produced in the country will also be banned.
If this occurs, it will undoubtedly have a huge impact on the Chinese EV industry. On September 15, Li Qian, the board secretary of BYD, posted a response on WeChat to express his dissatisfaction with the new policy.
“How can the two countries cut links in the EV industry?” wrote Li Qian. “The US is still in its infancy stage of EV development, supported by increasing subsidies, while China has completely shifted from policy-driven to market-driven mode. If Tesla doesn’t build a factory in Shanghai and relies on China’s mature supply chain, it’s nonsense to produce a large number of EVs. Tesla is also switching to using Chinese batteries as much as possible. Anyway, even if the Amercian EV maker doesn’t use Chinese batteries, it has to use Korean batteries, instead of American batteries. As for battery materials, Korean battery makers still rely on the supply chain of Chinese battery materials.”
Li concluded, “China’s EV industry has been developing in constant competition for many years. The EV field in the US relies on support, while China relies on involution and iteration. It is clear at a glance which one is the mainstream trend. Winners in the Chinese market have no rivals in the international market. Competition leads to healthier development.”
Li Qian’s response has been praised by investors. Some web users also expressed their support, writing, “This board secretary rocks,” and, “Full of confidence and a trace of disdain. Thumbs up for the attitude!”
SEE ALSO: BYD’s Three Battery Projects in Guangxi Surpass Production Capacity of 60GWh
President Joe Biden has now signed the Act, which has not been newly updated. The subsidies will come into effect from January 2023. The law requires 40% of key metal raw materials to be mined or processed in free trade countries in 2023, and 50% of battery assembly or production to be in North America in 2023.
In response to restrictions on trade with China, TF International Securities said that Chinese batteries would not be banned as the rumors suggest, but that they will not enjoy subsidies. From 2024, if the battery includes any components from a list of countries of special concern, which includes China, the subsidies will no longer be available.