There are a few exceptions or adjustments to the battery sourcing requirements for electric vehicles (EVs) in the context of U.S. tax credits:
- Non-Traceable Battery Materials Exemption: This exemption covers less than 2% of battery material by value, providing some flexibility for materials that cannot be traced.
- Temporary Transition Rule: The Treasury Department has proposed a temporary rule to address commingling in critical mineral supply chains. This allows for the allocation of critical minerals to specific battery cells without needing to physically track each mineral, provided the cells are physically tracked to batteries and vehicles using identifiers like serial numbers.
- Foreign Entity of Concern Exclusion: Until 2027, manufacturers can exclude battery materials from foreign entities of concern (FEOCs) in their due diligence and compliance determinations. This means they do not need to include materials sourced from countries like China, Russia, Iran, or North Korea in their compliance calculations until that date.
These exceptions help automakers navigate the complex sourcing requirements while striving for compliance with the U.S. tax credit regulations for EVs.
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