Here’s a breakdown of how battery component and critical minerals requirements differ for the U.S. Clean Vehicle Tax Credit:
Critical Minerals Requirements
- Purpose: Ensure sourcing of minerals like lithium, nickel, and cobalt from approved regions.
- Key thresholds (minimum % of mineral value from U.S./free-trade partners or recycled in North America):
- 2023: 40%
- 2024: 50%
- 2025: 60%
- 2026: 70%
- 2027+: 80%
- Credit value: Up to $3,750 of the total $7,500 credit.
Battery Component Requirements
- Purpose: Promote manufacturing/assembly of battery parts in North America.
- Key thresholds (minimum % of component value manufactured/assembled in North America):
- 2023: 50%
- 2024-2025: 60%
- 2026: 70%
- 2027: 80%
- 2028: 90%
- 2029+: 100%
- Credit value: Up to $3,750 of the total $7,500 credit.
| Requirement Type | 2023 | 2024-2025 | 2026 | 2027 | 2028 | 2029+ |
|---|---|---|---|---|---|---|
| Critical Minerals | 40% | 50-60% | 70% | 80% | 80% | 80% |
| Battery Components | 50% | 60% | 70% | 80% | 90% | 100% |
Both requirements must be met to qualify for the full $7,500 credit, with each contributing up to $3,750. Recent IRS guidance (July 2024) clarifies compliance standards for these requirements.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-battery-component-requirements-differ-from-critical-minerals-requirements-for-the-tax-credit/
