As the Biden administration works to strike a balance between two objectives — accelerating electric vehicle adoption and securing a domestic supply chain — forthcoming guidance that further constricts battery material and component sourcing rules could tip the scale.

Under the Inflation Reduction Act, buyers who meet certain income thresholds can get a tax credit of up to $7,500 for North American-assembled new EVs that also meet sticker price restrictions.

Starting April 18, the credit will be split in two, with $3,750 for EVs that have at least 40 percent of the value of the battery's critical minerals extracted or processed in the U.S. or in a country where the U.S. has a free-trade agreement, or from materials that were recycled in North America. Another $3,750 is available if at least half of the value of the EV's battery components are made or assembled in North America.

Those percentages ramp up over time, maxing out at 80 percent in 2027 for minerals and 100 percent in 2029 for battery components.

An updated list of eligible vehicles, including the amount of the available credit, is expected to be available April 18 at fueleconomy.gov. Automakers will report monthly to the IRS — under penalty of perjury — on which vehicles qualify.

Source: Automotive News