On March 31st local time, the US Treasury Department issued guidance on battery procurement requirements for electric vehicle tax credits. Last August, US President Biden signed the Inflation Act, which provides up to $7500 in federal tax credits for electric vehicles assembled in North America, but has strict standards for key minerals, components, and other sources in car batteries. The above bill is also known as the US version of the 'White List of Power Batteries'.
On the basis of the inflation bill, the guidance divides $7500 into two equal parts, corresponding to key mineral requirements and battery component requirements, with each item eligible for $3750. If both meet, you can receive a full tax credit of $7500.
According to the guidance, in terms of key mineral requirements, it is required that at least 40% of key minerals such as lithium, nickel, manganese, graphite, and cobalt in electric vehicle batteries must be extracted, processed, or recycled in the United States or countries with free trade agreements with the United States. This proportion will increase to 50% in 2024 and increase by 10% year by year, and needs to reach 80% by 2027. Currently, eligible countries include Australia, Bahrain, Canada, Chile, Colombia, Japan, etc. The European Union and the United Kingdom do not yet qualify.
The Wall Street Journal reported that government departments will also develop guidance on the provisions of the inflation bill regarding "foreign sensitive entities". Starting from 2024, if electric vehicles contain battery components or key minerals from "foreign sensitive entities" related to China, they will not be able to claim the aforementioned tax credit.
The Automotive Innovation Alliance, the largest automotive and battery trading organization in the United States, stated that few models are expected to qualify for full tax credits, and that car companies still face many issues in terms of procurement requirements. According to the alliance's data, currently about 43% of electric vehicles in the US market are eligible for tax credits, while before the inflation bill was enacted, when there were no requirements for the source of key minerals and components in batteries, this proportion was 92%.
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