US Likely to Apply IRA Battery and Mineral Tax Credits Starting March Next Year
Detailed Regulations to Be Released by the End of Q1 Next Year
[Asia Economy New York=Special Correspondent Joselgina] The U.S. Department of the Treasury plans to release detailed regulations on battery components and critical minerals, key requirements of the Inflation Reduction Act (IRA) that provides tax credit benefits only for North American-made electric vehicles, by March next year. Accordingly, the application timing is expected to be after March next year.
On the 19th (local time), the U.S. Treasury announced that it will disclose information on the direction of the critical minerals and battery component requirements for the implementation of the Inflation Reduction Act by the end of this year, and will announce the related rule proposal in March next year.
According to the law, the critical minerals and battery component requirements will only apply after the Treasury announces the rule proposal. This is interpreted to mean that until the rule proposal is announced in March next year, the ratio of critical minerals and battery components will not be used as a condition for tax credit payments.
However, the Treasury did not mention when it would announce detailed regulations related to the 'North American final assembly' condition. It only added that it is preparing additional guidelines related to eco-friendly vehicles for consumers and manufacturers.
According to the electric vehicle tax credit provisions in the Inflation Reduction Act, from now on, at least 50% (gradually increasing to 100% by 2029) of the battery components must be manufactured or assembled in North America to receive a $3,750 credit. For critical minerals in the battery, at least 40% (gradually increasing to 80% by 2027) must be mined and processed in the U.S. or countries that have free trade agreements (FTA) with the U.S. to qualify for the $3,750 benefit.
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Earlier, the Korean government conveyed to the U.S. government its position requesting either a relaxation of the definition of North American final assembly or a postponement of its application.
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