The Japanese government said Saturday it has asked Washington to loosen new rules around electric vehicle tax credits in the United States, on the grounds that they are putting Japanese automakers at a disadvantage.

The revised rules governing the tax credits for purchasing environmentally friendly vehicles, such as EVs, now require final assembly to take place in North America, limiting the range of Japanese EVs qualified for the purchase support.

The Japanese government conveyed its opinion to the U.S. government on Friday, calling for a flexible application of the tax credit rules so that a wide range of EV models made by Japanese automakers can qualify.

The government has raised concerns that vehicles imported from regions other than North America are now excluded from the tax credits. It also argued against provisions that require battery minerals to be extracted or processed in the United States, or from nations that have a free trade agreement with the country.

Furthermore, the government has said that the rules would make Japanese companies hesitant about making investments in the EV market, impacting on investment and employment in the United States.

It also said the requirements may obstruct the efforts being made by President Joe Biden's administration to achieve its climate goals by limiting the choices available to American consumers when purchasing EVs.

EV tax credits are a centerpiece of the Inflation Reduction Act, signed into law in August. Consumers buying a vehicle that qualifies under the new laws, such as an EV, can receive a maximum $7,500 tax credit.

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