Energy Dept. working with Treasury on EV tax credit guidance, says Granholm

LAS VEGAS — U.S. Energy Secretary Jennifer Granholm said her office is working with the Treasury Department on guidance relating to eligibility rules for revised $7,500 federal electric vehicle tax credits.

"We're working in a very interlocked way. Our folks and their folks are talking all the time," Granholm told Automotive News following an address Friday at CES. "Our policy office is working directly with Treasury to make sure that this guidance is out and it's informed by stakeholders."

The Inflation Reduction Act had required the Treasury Department to issue the proposed guidance about how the industry can meet new eligibility rules for EV tax credits on new vehicles by the end of 2022. The department, however, said it instead would offer information about the direction the rules may take.

Granholm said it was important "to send a signal about which way it's going" as Treasury delayed the release of guidance related to requirements for critical mineral and battery components until March.

While vehicle sticker price and buyer income eligibility rules took effect this month, those related to the sourcing of critical minerals and battery components won't be effective until after the formal guidance is released. Previously, the tax credit applied to any new battery electric vehicle, regardless of where it or its components were assembled.

Automakers and industry groups have asked for more clarity.

Granholm said Friday that she thinks there is a sense of understanding from industry and consumer groups "about what the credits will entail and what will be eligible, and I think it provides enough momentum for the OEMs to continue to onshore the components of the vehicles."

"They wanted to point where they were going so that everybody would feel comfortable that we weren't going to see a huge deviation," she said.

The $7,500 tax credit for new EVs includes a series of increasing requirements that battery components come from North America and critical minerals come from the U.S. or its free-trade partners.

Before 2024, and after Treasury's guidance is out, 40 percent of critical minerals must be extracted or processed in the U.S. or in a nation where the U.S. has a free-trade agreement in effect, or from materials recycled in North America. That jumps to 80 percent by 2027.

For battery components, 50 percent must be made or assembled in North America before 2024 and 100 percent by 2029.