The world’s largest carmakers are trying to water down a Biden administration effort to replace Chinese components with US ones in electric-vehicle manufacturing, as the industry grapples with dependence on battery materials processed overseas.
President Joe Biden’s flagship climate legislation, the Inflation Reduction Act, offers generous tax credits to electric vehicles made in North America. The new rules on the origin of batteries, their components and the critical minerals that comprise them will take effect in phases starting in 2024.
From that year, to qualify for the maximum $7,500 tax credit available under the new law, EVs must not have any battery components made or assembled “by a foreign entity of concern” — a reference to China, Russia, Iran and North Korea. In 2025, those batteries must exclude critical minerals extracted, processed or recycled in the same countries.