Auto, Heavy Truck Industry Decry Hikes in EV Components

Trade groups and major companies that make electric cars, light trucks and heavy trucks told the Office of the U.S. Trade Representative that domestic industry is not ready to take over from Chinese suppliers of graphite, artificial graphite and electric vehicle battery cells on the timelines the Section 301 tariff modifications propose.

However, a new trade association that represents would-be domestic upstream materials producers hailed the addition of graphite and artificial graphite, manganese and cobalt, and said the scope of the tariff hikes should be broader.

Autos Drive America, a trade association representing all foreign name-plate automakers with domestic car production other than Chrysler, said that hiking tariffs on "batteries, modules, cells, and critical minerals, especially on both natural and synthetic graphite, at this nascent stage of the transition to EVs, will have a chilling effect on the U.S. production of batteries and EVs."

The group, which covers companies with a total of 156,000 employees, also noted that USTR is not on the same page as the Treasury Department, which said the Inflation Reduction Act's timeline for cutting China out of the EV battery supply chain wasn't feasible for low-value materials such as graphite (natural and synthetic.). Its regulations on the foreign entity of concern restrictions said those goods would not have to be eliminated from EV batteries for carmakers hoping to qualify for consumer tax credits until the beginning of 2027.

Ford Motor wrote that it doesn't oppose a hike in tariffs on natural graphite in less processed forms (2504.10.10, 2504.10.50 and 2504.90.00). "However, given the low levels of domestic sources for the type of graphite needed to produce anodes for lithium-ion electric vehicle batteries, we recommend reducing the tariff on certain artificial and natural graphite that were the subject of recently expired exclusions, including: 3801.10.50 -- artificial graphite, in powder form; 3801.10.50 -- artificial graphite, in powder or flake form, for manufacturing into the lithium-ion anode component of batteries; 3801.90.00 -- natural graphite, in powder form."

Ford said that, though there is pilot production of these materials, domestic producers can't supply the kind of graphite needed by automakers for EV batteries at industrial scale.

Moreover, the company said it takes at least two years to qualify battery material, because you have to cycle the finished battery to see how long it will last. So, once domestic production is at scale, it will still take time to change vendors.

Cummins wrote that hiking tariffs on 8507.60.00.10, battery cells for EVs, in August will raise the cost to electrify the heavy trucking sector. Cummins makes battery modules in Columbus, Indiana, and is a party to a joint venture that is building an EV battery cell plant in Mississippi. That factory is under construction through next year, and will not be producing at scale until 2027. When it's complete, it will employ 2,000 people, the company said, but until then, it will have to import Chinese cells for the battery packs it assembles.

Cummins said it supported an exclusion for subheading 8419.50.50, which covers heat exchange units, nesoi; it said the machine is used in factories that employ 8,000 Americans.

Daimler Truck of North America wrote that it sells heavy duty and medium duty electric tractors, walk-in electric van chassis and electric school buses.

"The proposed increases to Section 301 tariffs on raw materials and EV components would cripple domestic EV production," the company wrote. It said the tariffs would add between $1,000 and $10,000 per vehicle it produces.

The Battery Advocacy for Technology Transformation (BATT) Coalition wrote that hiking tariffs on natural graphite, cobalt and manganese to 25% "will help American manufacturers in the Li-ion battery supply chain level the playing field against Chinese imports and unfair market practices," but suggested that the tariff may need to be higher to be effective. It described how a cobalt mine in Idaho broke ground in 2022, but cobalt prices had fallen from $40 at the time of planning to $25 at the ribbon cutting, and then to $15, which led to the mine's closure.

BATT also asked USTR to apply Section 301 tariffs to battery electrolyte solvents and salts. "Electrolytes are a critical component of Li-ion batteries and are mixtures of a solvent (typically a blend of ethylene carbonate (EC), dimethyl carbonate (DMC), fluoroethylene carbonate (FEC)), and a salt (typically lithium hexafluorophosphate - LiPF6) as well as small quantities of various additives. EC (HTS code 2932.99.90), DMC (HTS code 2920.90.90), FEC (HTS code 2932.99.90) and LiPF6 (HTS code 2826.90.90) are not included in the existing Section 301 tariffs or the proposed modifications," the group wrote. It said a U.S. manufacturer invested more than $30 million to build an EC plant, but the plant was abandoned, unfinished, "because China flooded the market with EC which reduced the price from $4,000/ton to $700/ton and made the project uneconomic."

The American Personal Transportation Vehicle Manufacturers Coalition also asked for more tariffs, saying that Chinese low speed personal vehicles, mostly EVs, mostly enter under 8703.10.50 and are transformed in the U.S. to 8703.90.01. It said the 8703.10.50 heading should be subject to a 100% tariff, just as electric cars and trucks will be. The coalition also just filed an antidumping duty petition (see 2407010009).

The United Autoworkers union took no position on EV inputs, but said USTR should hike Section 301 tariffs on agricultural implements, construction, and mining machinery and equipment.