The new proposal on EV tax credits calls for 50 percent of the critical minerals used in EV batteries to be extracted or processed in the U.S. or in 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.
Those requirements would increase to 80 percent after 2026 for critical minerals, and by 2029 would require 100 percent of the battery components to be made or assembled in North America. Final assembly of the vehicle also must occur within North America — a provision that would apply immediately after the bill is enacted.
Any vehicles with battery components that were made or assembled by China or other entities the federal government deems concerning would be ineligible for the credit starting in 2024. Vehicles with critical minerals that were extracted, processed or recycled by those entities would be excluded starting in 2025.
The credit, too, sets limits on the suggested retail price to no more than $80,000 for new pickups, SUVs and vans, and to no more than $55,000 for other vehicles such as sedans. Eligible buyers would be taxpayers with adjusted gross incomes of no more than $300,000 for joint filers, $225,000 for a head of household and $150,000 for single filers.
The proposal also creates a $4,000 tax credit for consumers buying certain used EVs and a credit for certain commercial vehicles.
The tax credits would be applied at the point of sale and expire after Dec. 31, 2032.
EV startup Rivian, in a statement Sunday, said while it applauds the focus of the pending reconciliation bill, “as currently drafted this legislation will pull the rug out from consumers considering purchase of an American-made electric vehicle.”
James Chen, Rivian’s vice president of public policy, told Automotive News sibling publication Crain’s Chicago Business that it would favor automakers such as Tesla and General Motors, which have had longer to ramp up production or do some manufacturing overseas.
GM last week said it is “encouraged by the framework laid forth in the legislative text.”
“While some of the provisions are challenging and cannot be achieved overnight, we are confident that the significant investments we are making in manufacturing, infrastructure and supply chain … can establish the U.S. as a global leader in electrification today and into the future,” said the Detroit automaker, which has committed $15.7 billion in EV manufacturing and created nearly 9,000 jobs in the U.S.
Daniel Ryan, Mazda North American Operations’ vice president of government and public affairs, said the Japanese automaker was concerned that the battery and critical minerals provisions could make it “very difficult” for automakers to reach EV sales targets set by the federal government.
Mazda currently offers only one fully electric vehicle, the MX-30 — a 100-mile-range crossover being rolled out in limited volume to customers in California.