WASHINGTON — Battery component and critical mineral sourcing requirements in the Inflation Reduction Act's consumer tax credit for new electric vehicles will take effect in April, the U.S. Treasury Department said Friday.
Treasury released its much-anticipated proposed guidance on the EV battery sourcing rules that are designed to incentivize domestic production and reduce reliance on foreign supply chains. Those eligibility requirements will go into effect for EVs placed in service — meaning the date the customer takes delivery of the vehicle — on or after April 18, the department said.
The consumer tax credit for new EVs, known as 30D, is available only for North American-assembled vehicles that also meet eligibility restrictions on sticker price and buyer income.
Among highlights of the guidance, intended to bring "clarity and certainty to manufacturers":
- Criteria identifying which nations that produce critical minerals have free-trade agreements with the U.S. Those criteria are not currently codified by law.
- A three-step process for determining the percentage of the value of the critical minerals in a battery.
- A four-step process for determining the value of the battery components manufactured or assembled in North America.
- A list of qualifying vehicles and the credit amount each may receive at fueleconomy.gov on April 18.
Starting April 18, the $7,500 tax credit will be parceled out in two halves for qualifying vehicles and buyers. Half is based on meeting escalating requirements for battery components to come from North America. The other half is based on critical minerals coming from the U.S. or its free-trade partners.
More specifically, the credit will require 40 percent of the value of a battery's critical minerals to 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 2027 — the last year of annual increases — it will require 80 percent.
It also will require 50 percent of the value of battery components to be made or assembled in North America. By 2029 — the last year of increases for this part of the credit — it will require 100 percent.