JAMA’s Anita Rajan: EV tax credit restrictions likely to hinder adoption

This article was originally published here: https://www.autonews.com/executives/jamas-anita-rajan-ev-tax-credit-limits.

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WASHINGTON — The new general director of the Japan Automobile Manufacturers Association’s U.S. branch office says the eligibility restrictions in the new electric vehicle tax credit could impede EV adoption in the U.S.

“The current eligibility requirements significantly narrow American consumers’ choices and likely make the tax credit less effective, thereby hindering the market uptake of electrified vehicles,” said Anita Rajan, who was hired in May to steer the group’s Washington, D.C., office following the departure of Manny Manriquez.

Under the Inflation Reduction Act signed last month, new EVs must be assembled in North America to be eligible. New restrictions on sticker price, buyer income and battery component and critical mineral sourcing take effect Jan. 1. The 2022-23 Nissan Leaf is the only Japanese-brand EV that may qualify for a $7,500 credit through Dec. 31, according to U.S. data.

Rajan, 42, submitted written responses to Staff Reporter Audrey LaForest on the challenges and opportunities facing Japanese automakers in the U.S. Here are edited excerpts.

Q: What are your top priorities as you settle into your new role?

A: Educating policymakers, stakeholders and the general public by telling the story of Japanese-brand automobile manufacturers’ continued growth and 40-plus years of significant investments in the U.S. auto industry. JAMA members are continuing this momentum by focusing on work force development, accelerating the transition to electrified vehicles, advancing critical technologies and enhancing sustainability efforts. I will continue to emphasize the spirit of innovation and environmental stewardship that is at the heart of Japanese automakers’ U.S. operations.

You came to JAMA after 19 years at Mitsubishi Motors R&D of America, most recently as manager of government affairs. How is that experience guiding your work?

The nearly two decades I spent at Mitsubishi Motors R&D of America equipped me with an appreciation for the complex journey that automobiles take from concept to consumer, as well as the many points where they intersect with various public policies along that journey. I quickly learned how politics often drives policy and associated timelines and how I needed to communicate that to internal stakeholders both in Japan and the U.S.

My regulatory background in the auto industry gives me a strong foundation to lead JAMA Washington’s stakeholder engagement and provide our Japan-based members with the necessary context to assess the politics and policies that affect their U.S. businesses.

What topics on your radar could affect Japanese automakers?

Some of the main issues we’re watching aren’t limited to Japanese-brand automakers but rather things that impact all U.S. automakers. We’re keeping a close eye on the politics and trade policies that impact our members’ supply chains, which has been a recurring theme since 2020.

We’re also looking at the economic ramifications of sustained high vehicle prices, tight inventory and the possibility of a recession.

Lastly, the industry issue of the day — electrification — is certainly a topic we are tracking closely. The automotive industry is in the midst of a transformational moment, with consumers and automakers embracing electrified vehicle technologies. This presents opportunities for increasing sustainability and lowering emissions but will depend on automakers’ ability to provide consumers with electrified vehicle choices that fit every need.

Additionally, the speed of the transition will rely on sound policy that supports this burgeoning electrified vehicle market. A good example is the unprecedented investment in charging infrastructure in the Infrastructure Investment and Jobs Act.

On Aug. 16, President Joe Biden signed the Inflation Reduction Act into law. The legislation includes an extended — but more complicated — EV tax credit. What is your initial reaction to the revamped credit?

While the Inflation Reduction Act represents significant progress in incentivizing EV manufacturing in the U.S. and transitioning commercial fleets and used vehicles, we believe broad incentives that offer more consumer choice would best maintain momentum toward widespread adoption of electrified vehicles and fulfillment of carbon reduction goals. Japanese-brand automakers are wholeheartedly committed to realizing a net-zero carbon future, and electrified vehicles are integral to achieving this goal. However, this once-in-a-century transition requires support from the U.S. government, and broad EV tax credits are critical to this transformation.

For new EVs, the tax credit adds increasingly stringent requirements for battery component assembly and critical mineral sourcing. How challenging will those rules be for Japanese automakers?

Japanese-brand automakers have a legacy of producing products as close to the consumer as possible. While vehicle supply chains are complicated and often involve components from around the globe, the U.S. is and will remain a critical market for our members. In fact, some JAMA members have recently announced longer-term plans to open battery manufacturing facilities in the U.S. to better facilitate the production of electrified vehicles. But as we continue to review the new law and monitor developments, JAMA is concerned that the EV tax credit’s increasingly stringent battery-related restrictions may limit the applicability of the tax credit for electrified vehicles.

Japanese automakers have invested billions in the U.S. over the last 40 years. Do you see that figure growing, given the new EV tax credit, which is designed to incentivize U.S. and North American production?

Yes. As of 2021, JAMA members have invested more than $57 billion in U.S. manufacturing since the first plant came online in 1982. It’s worth highlighting that this figure represents an 817 percent increase from just 30 years ago. Our members’ record of investing in their U.S. facilities and work force is unquestionable. Japanese-brand automakers have been community partners and economic engines across the U.S. for decades and are committed to that legacy for the decades ahead.

What are the greatest challenges facing the auto industry in the next decade?

The first is work force. Nearly every automaker across the U.S. will tell you that securing access to high-quality workers is vital to the success of not only the transition to electrified vehicles but also the integration of new technology into the vehicle, such as advanced driver-assistance systems. Workers today need to be flexible and well-trained, and automakers are increasingly committed to continuous education for their workers to ensure they can properly adapt to modern automotive manufacturing. Even beyond the factory floor, research, development and design are becoming increasingly important for our industry. This means it’s critical to have access to engineers and researchers who are capable of addressing the technical challenges of tomorrow.

The second major challenge is one we’ve already discussed, the auto industry’s once-in-a-century transition to electrified vehicles. This transition requires ongoing research, planning and investment from the automotive industry. It also requires a concerted effort throughout the EV ecosystem. This includes parts manufacturers, battery manufacturers, critical minerals producers/refiners, charging manufacturers and operators, public utilities, the government, and most importantly, consumers. Regardless of the difficult task ahead of us, JAMA members remain committed to seeing this transition through.

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