The premise is fair enough, no one is going to pay more unless they have to.
But this is the rub, they have to buy from approved supply chains to enjoy the new sales Government subsidies, which are very attractive. We saw just these last few days a glossy from BMW going all-in on ethical sources for batteries, what surprised me a bit was that they are going further in terms of accountability by specifically identifying approved countries, I thought that was a major new development in terms of policing the policy, even Australia got a mention.
Others will obviously follow, a little bit of natural competitive policing etc, just imagine any Western EV makers fibbing on sources, you can be sure the brand risk alone makes it unthinkable. Normally I would say its hard to police, but from what I have read the joint Western budgets on this are history making/eye watering and if not rigorously enforced with a very hard hand, its like giving China free money and that's not going to happen IMO.
This is where the IRA and the European equivalent the GDPI changes how we should look at this. For EV makers to gain tax payers cash to give to their EV buyers they must conform to a mandated supply chain, now even I raised an eyebrow as to how this could work at first. But when you study the IRA and GDPI you quickly see that the $400bn in the IRA plus the $270bn in the GDPI budget and what other Western aligned markets will tip in, its $bn's more. Suffice to say a great deal of margin will effectively flow to "approved" suppliers.
What this means to a tiddler like COB remains to be seen, but I think most of us would see it as more positive than negative.
Cheers
Phil
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