The battery assembly percentage for tax credit purposes is calculated based on the value of the battery components that are manufactured or assembled in North America relative to the total value of all battery components. Specifically, the process involves the following key points:
- The percentage is determined by dividing the total incremental value of North American battery components by the total incremental value of all battery components in the battery.
- “Incremental value” means the value of a battery component minus the value of any subsidiary battery components already contained within that major component.
- The calculation considers the value of battery modules (which contain battery cells) as well as the value of battery cells and the components they contain.
- For example, if a battery includes modules with cells, the value of the module and its internal components are factored into the calculation accordingly.
The applicable percentage thresholds for qualifying for tax credits currently are:
- 50% for vehicles placed in service after April 17, 2023, but before 2024
- 60% for 2024 and 2025
- Increasing by 10% increments each year thereafter until reaching 100% in 2029.
Meeting these thresholds allows a vehicle to qualify for portions of the clean vehicle tax credit—for instance, a $3,750 credit based on battery components assembled or manufactured in North America.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-is-the-battery-assembly-percentage-calculated-for-tax-credit-purposes/
