EV Tax Credit Regulations

The US Treasury Department has issued guidance on the battery production and mineral sourcing requirements for federal electric vehicle (EV) tax credits, which is expected to come into effect on April 18. Currently, the rules specify that 40% of minerals used in EV batteries must come from the US or a country with a free trade agreement with the US, while 50% of battery components by value must be made in North America. These percentages are expected rise to 80% and 100% respectively by 2027 and 2029. The credit is worth up to $7,500, but it is unclear which cars will qualify for the revised tax credit. The rules were due to be released in January but were delayed allowing for additional industry input.

It is worth noting that the Biden administration has cancelled an existing mine in the US due to environmental concerns, which could make it challenging to meet the new EV tax credit rules while other are on hold over protests by environmental groups. This has led to protests, including those who argue that these mines are necessary to meet the requirements for US minerals in EV batteries. Without sufficient mineral sources, it may be near impossible for US-manufactured EVs to qualify for the new tax credits. This adds an additional layer of complexity to the already onerous requirements for the nascent EV industry.

https://finance.yahoo.com/news/stricter-ev-tax-credit-rules-kick-in-april-18-what-it-means-for-buyers-134712924.html

https://thehill.com/opinion/energy-environment/592877-twin-metals-mine-cancellation-is-a-gut-punch-to-us-steelworkers/

https://www.npr.org/2022/02/18/1081872135/native-americans-protest-proposed-copper-mine-in-arizona

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