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New EV tax credit rules mean cars with Chinese materials won't qualify — but there's a catch

Yahoo Finance05-07

New rules from the Treasury Department will make it harder for vehicles to qualify for the full federal electric vehicle tax credit of $7,500, though automakers were also granted a reprieve. Currently...

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The automakers and their main trade group, the Alliance for Automotive Innovation , cheered the 2027 exemption for non-traceable elements.“This updated guidance from the Treasury Department is something we recommended. It makes good sense for investment, job creation and consumer EV adoption,” said John Bozzella, AAI preside","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"ARKG":"ARK Genomic Revolution ETF","BK4534":"瑞士信贷持仓","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","BK4585":"ETF&股票定投概念","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","GM":"通用汽车","STLA":"Stellantis NV","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","BK4588":"碎股","LU0106831901.USD":"贝莱德世界金融基金A2","F":"福特汽车","BK4544":"ARK ETF合集","BK4581":"高盛持仓","BK4504":"桥水持仓","LU0971096721.USD":"富达环球金融服务 A","LU1064927863.SGD":"JPMorgan Funds - Europe Dynamic A (acc) SGD-H","BK4099":"汽车制造商","TSLA":"特斯拉","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","BK4127":"投资银行业与经纪业"},"translate_title":"新的电动汽车税收抵免规则意味着使用中国材料的汽车将不符合条件，但有一个问题","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ARKG":1,"STLA":0.9,"TSLA":0.9,"F":0.9,"GM":0.9,"US10Y.BOND":0.8,"US12M.BOND":0.8,"US2Y.BOND":0.8,"US30Y.BOND":0.8,"US7Y.BOND":0.8,"US6M.BOND":0.8,"US5Y.BOND":0.8,"US3Y.BOND":0.8,"US912797FH58.BOND":0.6,"US912797FS14.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HH31.BOND":0.6},"content_text":"New rules from the Treasury Department will make it harder for vehicles to qualify for the full federal electric vehicle tax credit of $7,500, though automakers were also granted a reprieve.\nCurrently, the Inflation Reduction Act’s (IRA) federal EV credit requires that manufacturers ramp up sourcing of battery \"critical materials\" such as nickel and cobalt from the US and its trade partners and ensure that battery components are increasingly built in North America.\nIn addition to thresholds that increase over time for critical minerals, late last week Treasury released new rules mandating that manufacturers not use critical materials that originate from a Foreign Entity of Concern (FEOC) — including China, Russia, North Korea, or Iran — by 2025 if they want to receive the full EV tax credit.\nThe White House's goal with the mandates was to reduce the industry's reliance on battery materials and components from China. China’s chokehold over battery mineral production is the main concern for automakers who need to diversify supply chains and for the federal government as it looks to boost domestic production of these minerals. Morgan Stanley estimated that 90% of the EV battery supply chain originates from China, with Chinese companies like CATL and BYD dominating the space.\n\n“President Biden’s Inflation Reduction Act has unleashed an investment and manufacturing boom in the United States. I’ve seen firsthand in Tennessee, North Carolina, and Kentucky how ecosystems have developed in communities nationwide to onshore the entire clean vehicle supply chain so the United States can lead in the field of green energy,” Treasury Secretary Janet Yellen said in a statement. \nThe White House also pointed out that 15 gigafactories for batteries have been commissioned in the US since the start of Biden’s term in office.\nThe federal government, however, is giving automakers some important leeway in sourcing. \"The final regulations also identify certain impracticable-to-trace battery materials,\" the Treasury said, adding that \"qualified manufacturers may temporarily exclude these battery materials from FEOC due diligence and FEOC compliance determinations until 2027.\"\n\n\n\n  This photo taken on Dec. 8, 2022, shows the graphitization process of cathode materials for lithium-ion batteries at a workshop of a company in Hegang City, northeast China's Heilongjiang Province. (Photo by Xie Jianfei/Xinhua via Getty Images)\n \n\n  Xinhua News Agency via Getty Images\n \n\nThe exemption is a boon for automakers in sourcing low-value and hard-to-trace elements like graphite, which is a critical component of a battery’s anode and comes mainly from China. The automakers and their main trade group, the Alliance for Automotive Innovation (AAI), cheered the 2027 exemption for non-traceable elements.\n“This updated guidance from the Treasury Department is something we recommended. It makes good sense for investment, job creation and consumer EV adoption,” said John Bozzella, AAI president and CEO.\nBozzella noted that the EV tax credit was hard enough to qualify for; only 20% of EVs received the credit, and on top of that, requirements will get harder next year. A restriction on trace or low-value minerals would have meant even fewer (if not all EVs) would no longer qualify for the credit.\n“Imagine an EV that complied with all IRA eligibility requirements but is kicked out of the program because of a trace amount of a critical mineral from an FEOC. That makes no sense — especially when you consider the massive investments automakers and suppliers are making in domestic EV manufacturing,” Bozzella added.\nRead more: Are electric cars more expensive to insure?\n\n\n\n  Sen. Joe Manchin questions Education Secretary Miguel Cardona during a hearing in Washington, on Tuesday, April 30, 2024. (AP Photo/Susan Walsh)\n \n\n  ASSOCIATED PRESS\n \n\nCritics like Senator Joe Manchin (D-W.Va.), who helped push IRA legislation through the Senate back in 2022, have been critical of its implementation ever since.\n\"With this final rule for the consumer credit, their creation of loopholes in the commercial vehicle credit, and their EPA tailpipe rules, the Administration is effectively endorsing 'Made in China,'\" the Democratic senator from West Virginia said in a statement, adding that the White House is \"blatantly breaking the law by implementing a bill that they did not pass.\"\nManchin has vowed to lead a Congressional Review Act resolution of disapproval for the IRA’s tax credit implementation, which could lead to the repeal of Treasury’s guidance for untraceable elements.\nThat said, even with the rules currently in place and rules at their most lenient, only 22 vehicles sold in the US qualify for the tax credit, and only 13 of them qualify for the full $7,500.\nPras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.\nClick here for the latest stock market news and in-depth analysis, including events that move stocks\nRead the latest financial and business news from Yahoo Finance","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}