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.