US Automakers Get EV Sourcing Reprieve
Treasury department gives them three extra years to comply with stricter rules, potentially making more EVs eligible for tax credits.
Automakers now have more time to comply with rules governing sourcing of battery materials, such as graphite, of which China has the majority of the world’s supply.
Pexels/Kindel Media
The Biden administration has temporarily eased rules restricting electric-vehicle battery materials from China and other countries classified as Foreign Entities of Concern, potentially making more models eligible for tax credits.
The treasury department delayed enforcement of the restrictions, which officially took effect Jan. 1, until 2027, giving automakers more time to comply with rules governing sourcing of battery materials, such as graphite, of which China has the majority of the world’s supply.
The rules are tied to federal tax credits of up to $7,500 per EV and had sharply cut the number of EVs eligible for the breaks. Now carmakers can source some battery materials from the restricted countries while they work toward compliance in three years.
The government has been trying to wean the U.S. economy from Chinese suppliers through such restrictions, along with incentives for domestic production of EV materials.
More tax credits could buoy EV sales, which have waned in recent months, both in the U.S. and Europe.
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