Nissan is crawling through the 725-page act.
The Inflation Reduction Act is a 725-page monster document, which we broke down into a single article explaining the most pertinent facts Americans should be aware of. In short, the act will extend EV credits for a decade until the end of 2032, which will allegedly help reduce US emissions by as much as 40% by 2030.
There are still several grey areas in the act, and manufacturers like Nissan are still studying the contents. Even so, the act is already prompting massive US investment in battery plants as manufacturers try and avoid another of the act's primary targets.
President Biden wants to reduce reliance on battery packs from China. This will arguably be the most challenging task, as China's various battery suppliers are responsible for roughly 80% of the world's lithium-ion batteries.
Autoblog reports that Nissan is currently studying the contents, even though its Leaf is one of the few cars that still qualifies. "We believe that we need to further accelerate our efforts in electrification and localization, but we would like to take various measures based on a better understanding of the details," said Joji Tagawa, chief sustainability officer for Nissan.
While the Leaf may qualify, it is living on borrowed time, with the all-new Ariya taking over as Nissan's volume EV.
The Leaf and its battery were built in the USA, and the Ariya is made at the Tochigi plant in Japan. The battery is supplied by LG Energy Solutions, currently based in Korea. It is, however, worth remembering that the United States Energy Department announced that it would loan General Motors and LG $2.5 billion to help fund the construction of new lithium-ion battery plants in the US.
Korea is in a free-trade agreement with the USA, though this does not appear to make its manufacturers exempt from the repercussions. Hyundai and Kia are already making noises and may file a complaint with the World Trade Organization since the Inflation Reduction Act essentially renders existing free-trade agreements null and void.
As you can see, it's a legal minefield. Almost all volume manufacturers are setting up shop in the USA, but the law that restricts tax cuts for vehicles assembled only in North America comes into effect on 1 January 2023. That's not enough time for a phase-out project in the automotive industry.
Tagawa says that Nissan is still studying the intricate details of the law, with a specific focus on assembly and raw materials. Japan's Automobile Manufacturers Association also stated that it was concerned and keeping an eye on developments.
It seems Nissan won't make a knee-jerk reaction. Considering the implications for free-trade countries (the US has agreements with 20 countries), it's clear that there are still many problems and loopholes within the 725-page document.