Rules Would Bar EV Tax Credits if Batteries, Minerals Linked to China

The U.S. proposed new guidelines Friday spelling out which electric vehicles will be eligible for tax credits, ruling out those that contain batteries or minerals sourced from China and other nations that have fallen out of favor with the U.S.

The restrictions dictate which clean energy vehicles will qualify for a subsidy of up to $7,500 under President Joe Biden’s Inflation Reduction Act, a federal law promoting sustainable, domestic energy production.

Only about 20 out of the more than 100 electric vehicles on the U.S. market qualify for a tax credit as it is. That number may be further reduced when this regulation goes into effect.

If a clean energy battery went through an assembly line owned by any “foreign entity of concern,” the car it will go into would be immediately disqualified from earning its owner any tax breaks from the U.S. government, starting in 2024.

The new rules target firms incorporated or headquartered in China, Russia, North Korea and Iran, among others, as well as companies where 25% or more of the equity interest or board seats are controlled by those countries.

From 2025 onward, electric vehicles made with critical minerals, such as lithium, nickel and cobalt, mined or processed by any “foreign entity of concern” will also be ineligible for subsidies.

The rules will be open to public feedback from automotive leaders for several weeks and are subject to change depending on industry recommendations.

Some information for this report came from Agence France-Presse. 
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