WASHINGTON — The U.S. Treasury Department announced Monday that it will issue draft guidance on critical minerals and battery component requirements in March, effectively deferring those eligibility limits under the $7,500 tax credit for new electric vehicles.
Under the recently signed Inflation Relief Act, the sector will seek ways to meet revised EV tax credit eligibility rules designed to encourage domestic EV production and reduce reliance on foreign supply chains. Proposed guidance that further defines the Prevent wealthy buyers from getting discounts.
Instead, the Treasury Department said it would release information by the end of the year outlining the “expected direction” of critical mineral and battery component requirements that new EVs must meet to qualify. The ministry said it will also help automakers “prepared to identify vehicles eligible for the tax credit when the new requirements come into effect.”
Eligible EVs must be assembled in North America when the bill becomes law in mid-August. Here’s how the delay in guidance impacts future EV incentives:
- Limits on sticker prices and purchaser income remain in effect as of January 1st.
- The requirements for critical minerals and battery components will not take effect until the Treasury Department issues proposed guidance in March.
“The Treasury Department will issue a Notice of Proposed Rulemaking (NPRM) in March with proposed guidance on critical minerals and battery component requirements,” the ministry said. “By law, the requirements for critical minerals and battery components will only take effect after the Treasury Department issue that proposed the rule.”
The revamped $7,500 tax credit for new EVs will be split in two halves for eligible vehicles and purchasers. The half is based on meeting the escalating requirement for battery components from North America by 2024, with no supply of battery components from “foreign entities of concern.” Sourcing from 2025.
For critical minerals, 40% will be extracted or recycled in the United States or countries with which the United States has valid free trade agreements, or from recycled materials, after the Treasury Department issues proposed guidance before 2024. The law says it must be dealt with. in North America. By 2027, the law mandates 80%.
For battery components, the law states that 50% must be manufactured or assembled in North America by 2024 after the Treasury Department issues proposed guidance. By 2029, the law mandates 100%.
Automakers have asked the Treasury Department to clarify key provisions of the tax credit, expedite the localization of supply chains for EV batteries and critical minerals, and to ensure vehicle eligibility by doing so wherever possible. I asked for flexibility.
“Automakers and policy makers want this transition to happen more quickly, but increasing access to critical raw materials, expanding manufacturing capacity and expanding domestic supply chains will be a challenge. It won’t happen overnight,” the US said in comments submitted to the Treasury Department last month.
“We have said from the beginning that the requirements for critical minerals and battery components in the revised 30D EV tax credit are very complex. It should come as no surprise that we are taking this extra time to publish, Alliance CEO John Bozera said in a statement Monday: car news“In any event, credits will include additional restrictions on January 1st.”