In addition to flack from some foreign governments, the U.S. is now getting pushback from carmakers on its parameters to qualify for its new electric vehicle tax credit.
The U.S. government has gotten entreaties from the European Union and South Korea about qualification requirements that limit the credit to vehicles whose batteries are made with materials mined, processed or recycled in the U.S. or in any of its trade partners. The credit can total as much as $7,500, and carmakers are eager to see their products qualify for it.
The law authorizing the credit, though, excludes battery components that originate in China, Russia or other “foreign entities of concern.” One major motivation behind the exclusion is to help wean the U.S. from Asia-based suppliers, particularly China.
Now some carmakers are joining the chorus of those imploring the U.S. to step back from the restrictions around the tax credit. Ford and Toyota want the terms to be loosened, but some of the brands’ own raw-materials suppliers support the restrictions, Bloomberg reported.
Ford asked the government to exempt domestic suppliers from the foreign-entity qualification and to open up the credit to cars with batteries made by companies outside the U.S. if half or less of their ownerships don’t translate as “foreign entities of concern.”
Toyota asked that Japan be specifically mentioned in the tax credit law as a qualified source.
The Alliance for Automotive Innovation asked that the Internal Revenue Service consider the complexity of the overall vehicle battery supply chain as it works to finalize the law.
The tax credit’s battery-sourcing restrictions are scheduled to take effect in 2024.