The US is overhauling its EV tax credit scheme, which will see the incentive increase and brands requalify under the Inflation Reduction Act (IRA). However, Japan is petitioning for special consideration so that EVs made in its country will take advantage of the tax relief.
The Asian country expressed its intent in letters sent to the US Department of Treasury and the Internal Revenue Service, IRS. Japan referred to its position as a US ally since the end of World War II.
Japan was seriously concerned that the new tax regime would disadvantage its domestic car and battery makers. The act gives special allowance to North American battery production and material sourcing.
The legislation as proposed would significantly impact the investment decisions of Japanese brands like Toyota, Honda, Mazda, Nissan, and Subaru.
Japan wrote, “Taking into consideration the objective to work with allies and like-minded partners to establish resilient supply chains, allies including Japan should be accorded treatment no less favorable than countries in the North America region.” (via Automotive News)
The Oriental country does not have a free trade agreement with the US. However, Japan hosts the US military bases, accommodating about 50,000 military personnel.