Model Y

Make
Tesla
Segment
SUV

It was early in August when the Inflation Reduction Act passed by a single vote, but we are still reading daily reports of how this new Act is unfair to foreign automakers. In fact, its requirements essentially break multilateral trade agreements, and excluded nations and their manufacturers are not impressed. While the subsequent Affordable Electric Vehicles for America Act aims to give more breathing room to the likes of Hyundai so that it can still qualify for tax breaks, the European Union has now pointed out another way that the IRA appears to be wholly unfair.

Not only does it infringe on those World Trade Organization trade agreements, but the EU notes that it's shocking that such an Act could come to pass, given that American-made vehicles still qualify for Europe's EV subsidies.

Reuters reports that EU and US officials will hold talks this week to discuss new ways to give European companies, including electric vehicle manufacturers, the same status as US companies get.

"Last month, Tesla Model Y was the most-sold car in Germany," noted European Commission Vice President Valdis Dombrovskis. "That would not have been possible without the un-discriminatory EU subsidy, while EU electric cars do not get a similar subsidy in the US, which is discrimination that we want to address."

As other foreign representatives have noted, "there is a willingness to engage on the US side on this," said Dombrovskis. His comments were made ahead of meetings with US Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen.

"We hope we can resolve these issues before they become disputes," added Dombrovskis, revealing that these talks would pertain to whether implementation regulations to the US law could be made to change the status of EU companies. By so doing, the US could avoid sending the Inflation Reduction Act to Congress for amendments, which could take an incredibly long time.

However, if these issues are not resolved, it's quite possible that the EU could choose to withdraw its EV subsidy from American-made cars and impose other sanctions on goods imported into the bloc from the US. Hopefully, these talks have yielded fruit that will both satisfy foreign investors and nations while also boosting the US economy.