Granholm’s EV Road Trip Meets Regulatory Roadblock

In a recent development that demonstrates the stumbles of the Biden administration’s approach to promoting American use of electric vehicles (EVs), the Cadillac Lyriq, recently showcased by Energy Secretary Jennifer Granholm, has lost its eligibility for federal tax credits. The change in tax status comes as part of newly adopted Treasury Department rules aimed at curbing reliance on foreign components in domestic EV production.

Granholm used the Cadillac Lyriq for a highly publicized summer road trip designed to promote the adoption of EVs among ordinary Americans. The initiative was part of a broader push by the Biden administration to accelerate the transition to “green energy” and decrease America’s carbon footprint.

The Cadillac Lyriq, with a suggested retail price exceeding $60,000, originally offered purchasers a $7,500 tax credit under the Biden administration’s Clean Vehicle Tax Credit initiative. As of January 1, the benefit was withdrawn due to the vehicle’s use of Chinese components in its battery system.

Under the so-called Inflation Reduction Act of 2022 championed by the Biden White House, newer, more stringent requirements have been imposed for EV tax credits. The stated purpose was to reduce dependency on “foreign entities of concern” like China, North Korea, and Russia. The American EV market, heavily reliant on global supply chains, now finds itself in a predicament as it navigates these new rules amid sluggish demand for new EVs.

China holds a dominant position in the global rare earth market, controlling up to 90% of worldwide supply. This dominance extends to key materials necessary for EVs, like cobalt, nickel, manganese, graphite, lithium, and rare earths themselves.

Over 70% of all mined cobalt comes from the Democratic Republic of the Congo, with most of that supply controlled by China. This creates a dependency dynamic where U.S. initiatives to go green with renewable energy sources and EVs inadvertently increase reliance on China. Many economists and conservative commentators see the new federal EV mandates as contrary to the goals of reducing foreign manufacturing dependency and bolstering domestic production​.

While the Biden administration’s efforts to promote green energy and reduce reliance on foreign components are eagerly applauded by the corporate media, the case of the Cadillac Lyriq illustrates the complexities and challenges inherent in the top-down approach to compelling Americans to go all-in on adopting EVs.