EV tax credit restrictions could reshape automakers' supply chains, battery strategies

How the new EV tax credit rules work The revamped EV tax credit adds increasingly stringent rules on where battery critical minerals are extracted and processed, and where battery components are made or assembled for vehicles to be eligible. » For critical minerals: Before 2024 and after the U.S. treasury secretary issues the proposed guidance: 40% must be extracted or processed in the U.S. or in a country where the U.S. has a free-trade agreement in effect, or from materials that were recycled in North America. By 2024 50% By 2025 60% By 2026 70% By 2027 80% » For battery components: Before 2024 and after the U.S. treasury secretary issues the proposed guidance: 50% must be made or assembled in North America. By 2024/25 60% By 2026 70% By 2027 80% By 2028 90% By 2029 100% » Final vehicle assembly must occur in North America for EVs sold after the bill is enacted. » Starting in 2024: Vehicles are ineligible if the battery components were manufactured or assembled by a 'foreign entity of concern,' a term that encompasses specifically designated nations and organizations owned by, controlled by or under the jurisdiction of such nations. » Starting in 2025: Vehicles are ineligible if the battery critical minerals were extracted, processed or recycled by a foreign entity of concern. When will the current tax credit phase out? The old $7,500 tax credit — with no limits on price, income or battery content — will remain in effect until the end of 2022. However, upon signing of the bill, it immediately will be modified to apply only to vehicles assembled in North America, sources who have reviewed the legislation told Automotive News. SOURCE: Inflation Reduction Act WASHINGTON — Automakers had hoped for an electric vehicle tax break that is available to the broadest range of vehicles and consumers as they look to spur interest and grow the mass market for EVs in the U.S.

EV tax credit restrictions could reshape automakers' supply chains, battery strategies

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