Skip to content
Dan Bennett, PresidentDec 22, 20221 min read

Guidance for EV Battery Sourcing Delayed Until March By US Treasury

The U.S. Treasury Department announced recently that it will delay until March the release of proposed guidance for the required sourcing of electric vehicle batteries, as part of the revamped $7,500 electric vehicle tax credit that takes effect Jan. 1. The delay means that some electric vehicles that won't meet the new requirements may have a brief window of eligibility in 2023 before the battery rules take effect. This delay is due to the complex restrictions imposed by the Inflation Reduction Act (IRA), which was signed by President Joe Biden in August.

The IRA limits EV tax credits to vehicles assembled in North America and also requires that at least 40% of the value of the critical minerals in the battery have been extracted or processed in the United States or a country with a U.S. free-trade agreement, or recycled in North America. Some requirements for tax credits take immediate effect on Jan. 1, including new caps on income of buyers and retail prices for qualifying vehicles. But the delayed guidance means some buyers could receive tax credits for purchases of electric vehicles that ultimately will not comply with the battery sourcing rules when they are finally unveiled.

The delay of the guidance for electric vehicle battery sourcing has been met with criticism from some industry leaders, who argue that it could lead to some confusion and potentially higher costs for consumers. However, the Treasury Department is hopeful that the delay will give consumers more time to understand the new rules, and allow manufacturers time to adjust their production accordingly.

Source: Reuters