A growing number of automakers may shift investments to the U.S. if the European Union fails to increase aid following passage of the Biden administration’s Inflation Reduction Act, which includes about $370 billion in clean-energy subsidies, Bloomberg reported.

Volvo is the latest manufacturer to signal it could move investments here if Europe doesn’t act, the news service said. Its CEO, Martin Lundstedt, said the new measure will significantly increase demand for emissions-free trucks in the U.S.

"If nothing happens in Europe, we will have to think about where we're going to put the initial investments to scale up capacity for some of the technologies in the value chain," Lundstedt told Bloomberg. "This is not a threat, it's driven by customer demand and where volumes will accelerate."

The European Union’s proposed green-technology measure, intended to help the region compete with the U.S., has so far gotten a mixed reception due to concerns over a trade war and that subsidies would benefit only wealthier countries.

Lundstedt told Bloomberg that the European Union’s earlier message about green technology didn’t impress Volvo as much as the Inflation Reduction Act. He said the measure covers $45 per kilowatt hour of a battery’s production costs, which would “change the equation for customers.”

He added that it wouldn’t be a surprise if Volvo builds its next battery plant in North America, as the act is expected to increase vehicle sales demand there.

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