Biden makes electric vehicle credits elusive in bid for U.S. auto renaissance

BloomBerg

The Biden administra tion’s requirements for electric vehicle tax credits will reduce the number of models eligible for incen tives until tens of billions of new investment in U.S. manufacturing by automakers and suppli ers kick in.

The guidance released Friday clarifying pro visions of the Inflation

Reduction Act – Presi dent Joe Biden’s landmark climate bill – will leave few EVs eligible for up to $7,500 credits as of April 18, administration officials said. The reason: most don’t meet new requirements that battery components or critical minerals are sourced from North America or U.S. free trade partners.

The global auto industry eagerly anticipated the U.S. Treasury Department’s notice, with lobbyists pushing for months to loosen up the sourcing and content requirements. While tax credits for consumers included in the legislation, known as the IRA, will be difficult to attain, those incentives and additional perks for manufacturers have helped trigger announcements of more than $52 billion in EV and battery investment in the U.S.

The Treasury left still unclear how it will deem companies to be foreign entities of concern, which automakers won’t be able to turn to for battery components and critical minerals in the years to come. One of the overarching goals of the IRA is to make the U.S. less reliant on China, which dominates the EV battery supply chain.

The number of vehicles that will qualify for tax breaks will rebound as the supply chain is built out in the coming years, according to a senior Treasury official, who briefed reporters ahead of the release. Just 21 models have been eligible for credits before the guidance taking effect. “This latest turn will further reduce the number of eligible EVs,” John Bozzella, president of trade group Alliance for Automotive Innovation, said in a statement, adding it’s still unclear how many will qualify next month. “This period may go down as the high-water mark for EV tax credit eligibility since the IRA passed last year.” nnn

The Biden administration is looking to revive American industry while