Because multiple subsidies seem insufficient to lure multitudes into buying electric vehicles, President Biden is resorting to a labyrinthine industrial policy to supply what people are not demanding. A purchaser of an EV is eligible for tax credits of up to $7,500, if: If final assembly of the vehicle occurred in North America. And if a minimum of 40 percent (80 percent by 2027) of the minerals in the battery, and 50 percent (100 percent by 2029) of the vehicle’s components come from the United States or a country with which it has a “free trade agreement.” There are no such agreements with some nations that are important sources of EV materials, so the Biden administration has issued a semantic fiat: In the context of the pertinent legislation, the Inflation Reduction Act (IRA), the phrase “free trade agreement” shall mean any deal that encourages environmentally and labor-friendly trade — and such agreements do not need congressional approval.

Congress has inadvertently empowered the Environmental Protection Agency to accomplish indirectly what Congress never intended. Biden’s EPA has issued such stringent limits (beginning with the 2027 model year) on the pollution generated by each manufacturer’s total fleet, the limits will make internal combustion vehicles scarce. Generally under industrial policy, supply precedes demand, and demand lags until government circumscribes our choices for our own good. Why else have government plan things?

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