Reports: Lobbying to Extend Phase-in for EV Tax Credit Requirements in Bill
The electric vehicle tax credit provisions in the Inflation Reduction Act rest not just on North American vehicle assembly -- but also on critical mineral supply chains that don't exist yet and high North American battery content. Because the provisions are aimed at incentivizing new plants, automakers are lobbying for the phase-in to be more gradual.
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As proposed, 40% of the value of critical minerals in the EV battery would have to either be recycled in North America or mined or processed in a country that the U.S. has a free-trade agreement with -- such as South Korea, Chile or Canada. Those thresholds would increase to 80% by 2027. Starting in 2025, according to a White & Case alert, none of the minerals could be mined, processed or recycled in China or Russia, or by a Chinese or Russian company working outside those countries.
If those requirements weren't met by the automaker, half the credit would not be available. The other half of the credit is contingent on at least 50% of the battery's components being assembled in North America, reaching 100% by 2029.
Reuters quoted Sen. Debbie Stabenow, D-Mich., saying once the restrictions are fully phased in, it makes the credit cumbersome and unworkable.
Auto News reported that Alliance for Automotive Innovation CEO John Bozzella said "that a significant number of consumers will not be able to take advantage of this credit in the early years when it is needed the most."
But Sen. Joe Manchin, D-W.Va., the primary architect of the bill, said, "Tell (automakers) to get aggressive and make sure that we’re extracting in North America, we’re processing in North America and we put a line on China,” Manchin told reporters. “I don’t believe that we should be building a transportation mode on the backs of foreign supply chains. I’m not going to do it.”