America First: EV Tax Credit Proposal Adds Tougher Sourcing Limits for Critical Minerals, Batteries

Washington DC July 29, 2022; The AIADA reported that a Senate proposal would extend the current $7,500 tax credit for consumers buying new electric vehicles but add increasingly stringent critical mineral and battery sourcing requirements for automakers.

As part of the tax credit, automakers would be subject to annual increases in sourcing requirements for critical minerals and battery components used in eligible EVs and limited to sourcing from countries with a free trade agreement with the U.S. — a caveat aimed at reducing reliance on China reports Automotive News. By 2024, the proposal calls for 50 percent of the critical minerals used in EV batteries to be extracted or processed in the U.S. or a country where the U.S. has a free trade agreement in effect or from materials that were recycled in North America.

In 2024 and 2025, 60 percent of the battery components must be made or assembled in North America. Autos Drive America, which represents international automakers operating in the U.S., said it is still working through the proposal's full impact but will "encourage Congress to steer clear of any policy that would constrain electric vehicle production, hinder consumer adoption and make it more difficult to achieve our shared climate goals."

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