The U.S. Treasury Department on Friday posted guidance on battery materials, helping to clarify whether buyers of electric vehicles as soon as next month can claim a $3,750 credit dedicated to key mineral sources under the New Clean Car Credit or not.
Based on a first glance, the rules would create a wide net that follows a more liberal definition of government. preview in December—allows important minerals from countries with which the United States has established free trade agreements to count as tax credits. The interpretation of the rules, therefore, includes this week’s deal with Japanand confirm that Korea is included among many other countries.
Lucid Motors AMP-1 Factory, Casa Grande, Arizona
The rules are less important for important minerals, though push back the original purpose of legislation passed by Congress, which could be a good thing over the next few years for both automakers and car buyers, as it will ensure that a larger amount Electric Vehicles Made in North America eligible for the full amount of $7,500 of the credit.
What was revealed Friday is a proposed rule, which will then be formed into the final rule after feedback from stakeholders. Instead of diving into all the small details, the next section is a top-level look at what this new restriction means for short-term shoppers and the EV market in a broader sense.
Make the car eligible for the tax credit
Under the Clean Vehicle Credit, known as 30D, vehicles must be last assembled in North America and not exceed the maximum allowable price tag of $55,000 for passenger cars and $80,000 for SUVs and semi-autos. trucks and lorries.
If they meet that cut, there are two parts that determine the actual amount of credit: one goes to battery components and the other goes to key minerals.
2022 GMC Hummer EV pre-production at Factory Zero in Detroit, Michigan
The latter is the one that is particularly challenging today, because while most electric vehicles sold in the US have US-made batteriesAbout 60% of the world’s important EV mineral battery materials are processed in China. The battery components section for 2023 requires that 50% of the value of the battery components be manufactured or assembled in North America. For this important mineral to be made clear today, 40% of the critical mineral value contained in a battery for 2023 must be extracted or processed in the United States or a country with a free trade agreement. with the United States. Both of these requirements will be tighter in future model years.
Furthermore, by 2024 for battery components and 2025 for critical minerals, additional restrictions will be imposed on those products introduced by “worrisome foreign entities” .
To qualify buyers for tax credits
It’s also important to note that to qualify for the credit, you must purchase the vehicle for your own use, primarily use it in the United States, and have adjusted adjusted gross income of no more than $150,000. for single filers or $300,000 for couples filing jointly. You will also need to have at least equal to the credit in taxes due.
The 150,000th Ford Mustang Mach-E built
Where is the list of eligible vehicles and the amount?
Manufacturers self-certify this under penalty of perjury, with the IRS responsible for enforcing the rules and ensuring vehicle listings are maintained. Automakers will need to certify with the IRS monthly, so the list is constantly growing and may need to be much more detailed and processed on a VIN basis—with VW . ID.4 and its similarly sized battery packs sourced from different vendors for example.
But the list is not posted yet. The Critical Minerals Rule goes into effect for vehicles delivered starting April 18 (regardless of when you’ve paid) and agencies will have a list of the assets available to them. eligible vehicle at the time.
After announcing the framework on Friday, the Treasury Department will give automakers two weeks to analyze the rule and how it affects them, so this could change.
For emphasis: The list of eligible vehicles is expected to be more than just shorter. The amount will drop to $3,750 for many U.S.-built electric vehicles, as a few, if any, will initially qualify for the critical minerals section.
Stickers created by UAW on Chevy Bolt EV 2022
What this means for jobs in the US
It can mean a lot of work over time. The guidance, according to senior White House officials, “will give manufacturers more certainty so they can plan to bring more supply chains ashore in the coming years and ensure that we can work with our allies and partners to reduce our dependence on China and strengthen our national security.”
According to the Biden administration, there has been $90 billion in new investment related to the EV battery supply chain, with half of that investment occurring after the IRA was passed. There are currently about 75 US facilities across 24 states involved in the supply chain of critical battery materials.
Ultimately, tighter control over details like key minerals could help keep the Inflation Reduction Act’s intent, to improve energy security, lower costs for Americans, and reduce the national debt. our.
And the guidance, according to senior Treasury, Energy and White House officials, will give manufacturers more certainty so they can plan to bring more supply chains ashore, in order to reduce our dependence on China and strengthen our national security.
While the guidance only applies to the Clean Car Credit, it is hoped that this will help spur a widespread change in the supply chain that affects everything from solar panels and turbines. -windbin to EV battery.
Mercedes-Benz Alabama Battery Factory
But wait, there are other incentives for companies
From the IRA, the federal government has both the Clean Car Credit and the Advanced Manufacturing Tax Credit. An IRA isn’t the only tool the federal government has activated to help cut battery costs. Manufacturers are eligible for a 45X credit per unit for manufacturing clean energy components, including batteries, solar components, inverters, and more, while 48C is a credit. 30% tax prepaid for clean energy parts production.
And then there’s the 45W, Commercial Clean Vehicle Credit, which could have been written so companies could claim a $7,500 credit for team vehicles. But now it is help make luxury EV leases cheaper, regardless of battery or mineral origin. Loophole or not, it’s another way IRAs are directly helping electric vehicle shoppers.
