BYD Board Secretary Responds to U.S. Chinese Battery Ban Rumors

On the evening of September 14, a rumor that the United States government’s recently passed Inflation Reduction Act would ban Chinese batteries after 2024 spread on Chinese social media. The potential policy was later rejected by the board secretary of BYD, a Shenzhen-based electric vehicle and battery giant.

According to the relevant provisions of the law, the U.S. government will provide tax credits of $7,500 and $4,000 to consumers who purchase new and used electric vehicles, respectively, provided that final assembly of the vehicles is performed in the United States or in a country that has signed a free trade agreement with the United States. More than 40% of the raw materials used to make electric vehicle batteries must come from North America, the law added.

In another part, the new law apparently states 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 happens, it will undoubtedly have a huge impact on China’s electric vehicle industry. On September 15, Li Qian, secretary of BYD’s board of directors, posted a response on WeChat to express his dissatisfaction with the new policy.

“How can the two countries sever ties in the electric vehicle industry? writes Li Qian. “The United States is still in its infancy in electric vehicle development, supported by growing subsidies, while China has completely shifted from a policy-driven mode to a market-driven mode. If Tesla doesn’t builds no factory in Shanghai and relies on China’s mature supply chain, it makes no sense to produce large numbers of electric vehicles Tesla is also switching to using Chinese batteries as much as possible. Either way, even if the American electric vehicle manufacturer does not use Chinese batteries, it must use Korean batteries instead of American batteries.When it comes to battery materials, Korean battery manufacturers still depend on the Chinese battery material supply chain.

Li concluded, “China’s electric vehicle industry has been developing under constant competition for many years. The electric vehicle field in the United States is based on support, while China is based on involution and iteration. It is clear at a glance what the dominant trend is. The winners of the Chinese market have no rivals in the international market. Competition leads to healthier development.

Li Qian’s response was welcomed by investors. Some netizens also expressed their support, writing, “This board secretary is awesome” and “Full of confidence and a trace of disdain. Bravo for the attitude!

SEE ALSO: BYD’s three battery projects in Guangxi exceed production capacity by 60 GWh

President Joe Biden has now signed the law, which has not been recently updated. The subsidies will take effect from January 2023. The law requires that 40% of major metal raw materials be mined or processed in free-trade countries by 2023, and 50% of battery assembly or production in North America in 2023.

In response to restrictions on trade with China, TF International Securities said Chinese batteries would not be banned as rumors suggest, but would not receive subsidies. From 2024, if the battery includes components from a list of countries of particular concern, including China, subsidies will no longer be available.

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