To qualify for the clean vehicle tax credit’s Critical Mineral Requirement, certain exemptions and special considerations exist:
- Impracticable-to-trace materials: Final rules exempt battery materials that are impracticable to trace (e.g., minimal-value additives or electrolytes) from testing for the Critical Mineral Requirement or Foreign Entity of Concern (FEOC) restrictions.
- FEOC compliance: Minerals processed or recycled by a FEOC at any stage (e.g., extraction, refining) disqualify the vehicle, unless all steps comply with FEOC restrictions (e.g., no involvement of entities subject to foreign adversary jurisdiction).
- Material scope: Only minerals listed in Section 45X(c)(6) of the Inflation Reduction Act are assessed. Minerals not explicitly covered under this provision are excluded from the requirement.
The Critical Mineral Requirement itself mandates increasing percentages (40% in 2023, rising to 80% by 2027) of minerals sourced from the U.S. or free-trade partners, with no blanket exemptions beyond the above exceptions.
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