Sen. Marco Rubio (R-Fla.) has asked the Biden administration to stop U.S. electric vehicle (EV) tax credits from going to Chinese companies through their partnerships in South Korea.
In the past five months, four Chinese firms have announced investing more than 5.6 trillion won ($4 billion) in South Korea for new EV battery factories. These deals were established to take advantage of Korea’s free-trade agreement with the United States to qualify for EV tax credits under the U.S. Inflation Reduction Act (IRA).
GEM also stated that its investment of more than $937 million for an EV battery precursor factory with an annual production capacity of 43,000 tons in South Korea was a response to the IRA. The project is implemented by a joint venture between South Korea’s SK On Co. Ltd. and Ecopro Materials Co. Ltd.
“Since the Democrat’s Inflation Reduction Act, I have been deeply concerned that China would benefit from American taxpayer dollars,” Mr. Rubio said in a statement emailed to The Epoch Times. “Now, reports that Chinese firms are setting up partnerships in South Korea in order to qualify for Joe Biden and the Democrats’ EV tax credits prove those concerns are warranted.
“This is a clear attempt by the Chinese Communist Party to circumvent U.S. law and use American taxpayers’ money to expand its influence in Asia.
“The Biden Administration must act swiftly.”
The Department of the Treasury is still in the process of providing guidance on applying “foreign entity of concern” to the IRA tax credit requirements.
According to Prateek Biswas, a research analyst at Wood Mackenzie, a UK-based global energy research and consulting company, American consumers can use the clean vehicle tax credit of up to $7,500 per new qualified vehicle purchase if the China–South Korea partnerships are in joint ventures. That’s because the current definition of “foreign entity of concern” covers companies “owned by, controlled by, or subject to the jurisdiction of the Chinese government,” he said.
“Since the US is proactively attempting to stem Chinese investments in critical mineral projects located in countries it is allied with, the upcoming rules will likely incorporate some sort of restrictions on partial Chinese company ownership,” Mr. Biswas told The Epoch Times.
State Department spokesperson Matthew Miller, in response to Chinese partnerships with South Korean companies, said at a press briefing on July 31: “We certainly understand that other countries like South Korea have relationships with China, including economic relationships. We have a significant economic relationship with China.
“I will say with respect to all of our enforcement actions we always look on ways to improve those actions, in ways to tighten those actions, in ways to enforce them, including people who are—people and entities that are trying to evade them. That’s a general comment without respect to any specific report, but that remains our policy and will be going forward.”
Mr. Rubio has been demanding a commitment from the Biden administration that no IRA tax credits will go to Chinese companies, directly or indirectly.
Ford’s partnership with CATL, announced in February, is to build a battery park in Marshall, Michigan. The plant will start operating in 2026 and will be a wholly owned subsidiary of the U.S. company; CATL will provide the battery technology, some equipment, and workers.
The Epoch Times contacted the Department of Treasury and the Federal Highway Administration, an agency of the Department of Transportation, for comment but received none by press time.
