No electric vehicles on the market today qualify for the new EV tax credit - The Verge

No electric vehicles on the market today would be eligible for the newly expanded EV tax credit thanks to provisions that would require battery components to be sourced from North America.

Congress is poised to approve newly expanded tax credits for electric vehicles, but the rules are written in such a way as to effectively disqualify every EV that’s currently on the market today.

That’s because most EVs run on lithium-ion batteries that are mostly made in China. The nation has a lock on some 76 percent of the battery market today (the US only represents 8 percent). And to get a deal passed in a deadlocked Senate, Democrats agreed to provisions that would require eligible vehicles to use batteries that are made in North America.

The Inflation Reduction Act of 2022, which passed the Senate this weekend in a party-line vote, would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for a $7,500 tax break. By 2029, battery components would have to be 100 percent made in North America.

Batteries that contain minerals that “were extracted, processed, or recycled by a foreign entity of concern,” which is defined as a state sponsoring terrorism or countries blocked by the Treasury Department’s Office of Foreign Assets Control, would be ineligible for the credit. China is listed as a “foreign entity of concern” by the federal government.

Democrats, including West Virginia Senator Joe Manchin, who negotiated the deal in secret with Senate Majority Leader Chuck Schumer, are running on a tough-on-China message this year. But the auto industry says that the new requirements would basically disqualify every EV on the market today.

https://www.theverge.com/2022/8/8/23296678/ev-tax-credit-qualify-battery-supply-chain-china

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