The U.S. government on Friday eased some rules governing electric vehicle tax credits, potentially making more EVs eligible for up to $7,500 in tax credits, but critics say the Biden administration He is accused of supporting the.
The Treasury Department has released final regulations regarding credits under the Inflation Control Act of 2022, giving automakers time to comply with some provisions regarding the sourcing of battery minerals.
Credits for new EVs range from $3,750 to $7,500. There is also a $4,000 credit for used items.
The aim is to stimulate demand for EVs in order to achieve the Biden administration's goal of making half of all new vehicle sales EVs by 2030. This year, instead of waiting, the credits will be available when you purchase a vehicle from an authorized dealer. For income tax refund.
Eligibility for the credit depends on your personal income, the value of your vehicle, and increasingly stringent battery composition and mineral requirements. To qualify for the credit, the EV must be assembled in North America. Some plug-in hybrids are also eligible.
Complex rules are being phased in starting this year to encourage the development of the domestic electric vehicle supply chain. The rule would limit EV buyers from claiming full tax credits when purchasing vehicles that contain battery materials from China or other countries of “concern” deemed hostile to the United States. This includes Russia, North Korea, and Iran.
But under the final rule, small amounts of graphite and other minerals used in batteries will be exempt from regulation until 2027 because their country of origin is nearly impossible to trace, officials said. The Treasury Department said that without the exemption, some vehicles that met nearly all the requirements could be disqualified from the tax credit due to small amounts that cannot be traced.
The National Mining Association denounced the new exemption as a favor to China.
“Congress created these tax incentives to help secure the supply chain and create American jobs while supporting the proliferation of EVs. They are essentially transferring money from American taxpayers to China. We never intended to create a loophole that would amount to a blank check,” said Rich Nolan, president and CEO of the mining lobby.
West Virginia Sen. Joe Manchin, the Democratic chairman of the Senate Energy and Natural Resources Committee, said that through the new rules, the Biden administration is “effectively endorsing 'Made in China.'” ”
Manchin, who played a key role in passing President Joe Biden's landmark climate law, the Inflation Control Act, said the law would ban EVs containing material from foreign adversaries such as China and Russia from 2024 onwards. specifically prohibits them from being eligible for tax deductions. But now the Treasury Department is providing a long-term path for these countries to remain in our supply chains. It’s outrageous and illegal,” he said.
This year, half of the critical minerals in EV batteries must be mined or processed in the United States or countries with free trade agreements. 60% of battery components must be manufactured or assembled in North America.
From 2025 onwards, batteries using critical minerals from countries of concern will not be eligible for tax credits. However, after receiving comments from the auto industry and others, the Treasury Department decided to ease the restrictions.
The rules announced Friday will likely make more EVs eligible for the credit in 2025 and 2026, but the auto industry says it won't do so until automakers have tracked the origin of all minerals. It is said that it is difficult to judge.
“The transition to electric vehicles requires a complete transformation of America's industrial base,” John Bozella, CEO of the Alliance for Automotive Innovation, a major industry group, said in a statement. “This is not going to happen overnight, it is not possible.”
He said the rule change “makes sense for investment, job creation and consumer EV adoption.”
Currently, China has a monopoly on a significant portion of EV battery supply and production, even as automakers race to establish key mineral and component initiatives in other countries.
According to the Automobile Alliance, only 13 of the 114 EV models currently sold in the U.S. qualify for the full $7,500 credit.
Despite the tax credit, electric vehicle sales from January to March this year increased by just 3.3% to nearly 270,000 units, up from last year's record sales and 7.6% market share of 47%. This is far below the growth rate. The Tesla-led economic slowdown confirms automakers' concerns that they are moving too quickly to chase EV buyers. According to Motorintelligence.com, the share of EVs in total US sales fell to 7.15% in the first quarter.
Treasury Secretary Janet Yellen said in a statement: “The Inflation Control Act's Clean Vehicle Credit helps consumers save up to $7,500 on new cars and hundreds of dollars a year on gas, while creating good-paying jobs. and strengthen energy security.”
