The critical minerals requirement significantly affects the eligibility and amount of the Electric Vehicle (EV) tax credit, particularly for new clean vehicles purchased in 2023 or later. Here’s how it impacts the EV tax credit:
Critical Minerals Requirement
- Eligibility for Tax Credit: Vehicles must meet specific criteria regarding the sourcing of critical minerals in their batteries. These minerals must be extracted, processed, or recycled within the United States or countries with which the U.S. has a free trade agreement.
Percentage Requirements by Year
- 2023: The applicable percentage of critical minerals required to qualify for a $3,750 credit is 40%.
- 2024: The percentage increases to 50%.
- 2025: It rises to 60%.
- 2026: The requirement is 70%.
- 2027 and After: The percentage climbs to 80%.
Impact on Tax Credit Amount
- Meeting the Critical Minerals Requirement Only: Vehicles that meet this requirement can qualify for a $3,750 tax credit.
- Combining with Battery Components Requirement: Vehicles meeting both requirements can qualify for the full $7,500 tax credit.
Exceptions for Non-Traceable Materials
The final rule includes a temporary exception for certain “non-traceable critical materials” like graphite in anode materials, allowing a tracing exemption until January 1, 2027. This means automakers using these materials can still receive the credit if they comply with other requirements and submit necessary reports during the transition period.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-critical-minerals-requirement-affect-the-ev-tax-credit/
