Made-in-America Electric Cars

Good in Theory but a Complicated Mess in Practice

Made-in-America Electric Cars

While it’s been hailed as a historic piece of climate legislation, the Inflation Reduction Act is less a climate bill, per se, than a piece of industrial policy focused on building out domestic supply chains for clean energy that will benefit the climate. That’s a big deal. By international standards, though, the United States is still catching up and relying mainly on the kinds of demand-side incentives that have long speckled the U.S. tax code.

Public and private spending on the energy transition in China last year totaled $266 billion, compared with $114 billion in the U.S, according to Bloomberg. That’s all a far cry from the $9 trillion in annual investments that McKinsey estimates will be needed to reach net-zero by 2050. But the IRA—and the shock waves it sends through trade and investment policy—could play an outsize role shaping how and whether that money gets out the door.

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