The US government has issued new guidance on electric vehicle (EV) tax credits, including requirements for critical mineral and battery component procurement, as part of its efforts to reduce the country’s reliance on China’s EV battery supply chains. The new sourcing requirements, which take effect on April 18, 2023, will reduce or eliminate credits on some zero-emission models. To secure a tax credit worth $3,750, EV battery components worth 50% of the total value must be manufactured or assembled in North America, and the sourcing of critical minerals used in battery production must come from an eligible free trade partner or the US, constituting 40% of the value of these minerals. The rules aim to increase domestic supply chains for these commodities to meet President Joe Biden’s target of making 50% of US new vehicle sales EVs or plug-in hybrids by 2030.

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