New UK and US economic partnership could benefit British electric car firms

British electric car firms could be given access to new US green tax credits and subsidies under a new ‘Atlantic Declaration’ agreed by Prime Minister Rishi Sunak and American President Joe Biden at the White House.

The partnership which was signed yesterday (Thursday), will see both countries work together more closely than ever before across the full spectrum of economic, technological, commercial and trade relations.

Negotiations will begin immediately on many aspects of the partnership, including on a Critical Minerals Agreement. An agreement would give buyers of vehicles made using critical minerals processed or mined by UK companies access to tax credits in line with the US Inflation Reduction Act. The Inflation Reduction Act provides a $3,750 incentive for each vehicle, on conditions including that the critical minerals used in its production – principally used in the battery – are sourced from the US or a country with whom the US has a critical minerals agreement.

The UK is already a net exporter of raw materials for EV batteries to the US and this agreement will help UK-based firms involved in the mining, recycling and refining of critical minerals who are suppling US electric vehicle and battery manufacturers – benefiting this growing industry. This is a a sector with companies all over the UK, including nickel production in Wales and lithium processing in Teesside.

The Prime Minister said: ”The UK and US have always pushed the boundaries of what two countries can achieve together. Over generations we have fought alongside one another, shared intelligence we don’t share with anyone else, and built the strongest investment relationship in world history.

”So it’s natural that, when faced with the greatest transformation in our economies since the industrial revolution, we would look to each other to build a stronger economic future together.

”The Atlantic Declaration sets a new standard for economic cooperation, propelling our economies into the future so we can protect our people, create jobs and grow our economies together.”

With a trading relationship worth £279 billion a year, and shared investment totalling over £1 trillion, the US is already our most important trading partner. Earlier this week the Prime Minister announced £14 billion of new US investment into the UK, demonstrating the importance of this relationship to UK growth and jobs.

Teams from the White House and Downing Street will meet regularly to drive action under the Atlantic Declaration, ensuring it continues to meet the high objectives the Prime Minister and President Biden have set today.

An action plan for the future of the partnership includes:

• Working together to reduce the countries vulnerabilities across critical technology supply chains, including by sharing analysis, developing and deepening channels for coordination and timely consultation during crises. To support the critical clean energy industry, net zero ambitions and to keep Russia out of the global civil nuclear power market, the UK and US will launch a new civil nuclear partnership.
• An innovative approach targeting specific areas for economic advancement. This includes a commitment in principle to a new UK-US Data Bridge which would make it easier for around 55,000 UK businesses to transfer data freely to certified US organisations without cumbersome red tape – translating into an estimated £92.4m in direct savings per year. It also includes the immediate launch of negotiations on a Critical Minerals Agreement.
• Stepping up international efforts to ensure the safe and responsible development of AI, starting with an international summit on AI safety which will be hosted in the UK later this year, welcomed by the US.
• Enhancing cooperation on measures to stop our adversaries from developing and acquiring sensitive technologies that can be used to do us harm.
• Research collaboration to entrench UK and US leadership in the most important future technologies – AI, future telecoms (5G & 6G), quantum, semiconductors and engineering biology.
• New opportunities for increased investment in one another’s economies. President Biden plans to ask the US Congress to designate the UK as a ‘domestic source’ within the meaning of Title III of the the Defense Production Act – meaning British companies can benefit from US Government investment on the same basis as American firms. The act has previously been used to speed up the development of hypersonic weapons.

Image courtesy of Shutterstock.