Dec. 1 (UPI) — The IRS and Treasury Department on Friday laid out guidance on electric vehicle tax credits for foreign manufacturers under the Inflation Reduction Act.
The rules define eligibility for up to $7,500 per vehicle in tax credits under the Inflation Reduction Act as well as battery manufacturing grants under the Bipartisan Infrastructure Law, applying restrictions to what the Biden administration calls foreign entities of concern, or FEOC.
“To strengthen the security of America’s supply chains, beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured or assembled by a FEOC, and, beginning in 2025, an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a FEOC,” a Treasury Department statement said.
The new proposed guidance establishes the percentage of North American content for both EV batteries components and critical minerals that must used in their production. For 2023 the percentages are 50% for batteries and 40% for minerals.
For 2024 and 2025 it will be 60% for battery components. For minerals in 2024 the percentage is 50%. In 2025 the minerals content will be 60%.
By 2029 those percentages rise to 100% for battery components and 80% for minerals.
A maximum credit of $7,500 per new clean vehicle was enacted in April 2023. That credit consists of $3,750 if certain critical minerals requirements are met and $3,750 if battery components requirements are met.
“The Inflation Reduction Act’s clean vehicle tax credit saves consumers up to $7,500 on a new clean vehicle and hundreds of dollars per year on gas, while creating American manufacturing jobs and strengthening our energy security,” Treasury Secretary Janet Yellen said in a statement.
According to the Treasury Department nearly $100 billion in private-sector investment has been announced throughout the U.S. clean vehicle and battery chain as a result of the Inflation Reduction Act.
The proposed amended EV tax credit rules attempt to deal with China’s domination of critical minerals production for EV’s while also meeting the Biden administration clean energy goals.
“President Biden entered office determined to reverse the decades-long trend of letting jobs and factories go overseas to China,” said White House Senior AdvisorJohn Podesta in a statement. “Thanks to the Investing in America agenda and today’s important guidance from Treasury and the Department of Energy, we’re helping ensure that the electric vehicle future will be made in America.”
