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Bill seeks to delay EV tax credit US Sourcing Rules

Congressional lawmakers are seeking to delay requests for domestically sourced content under the revised federal EV tax credit.

Recent invoices are featured in Senate and House of Commons would create a gradual phase for these requirements compared to that set out in the new electric vehicle tax credit rules enacted under the Inflation Reduction Act (IRA).

The Senate version was introduced by Georgia Democratic Senator Raphael Warnock (who is currently facing a second round election against Republican rival Herschel Walker), with a companion House bill introduced. Introduced earlier this month by Representatives Terri Sewell of Alabama, Emanuel Cleaver of Missouri and Eric Swalwell—all Democrats have won their respective midterm races.

Mercedes-Benz battery factory

Mercedes-Benz battery factory

Under the IRA, the tax credit remains unchanged at $7,500. But to qualify for sufficient quantities, electric vehicles and their battery packs will have to be assembled in North America, and some of the minerals used in the batteries will have to be sourced domestically or from countries where the U.S. have a free trade agreement.

Specific rules for the mineral composition of batteries are not included in IRAs, leading to some confusion as to which electric vehicles will actually qualify, but the Internal Revenue Service (IRS) and the U.S. Department of the Treasury allow it. learned in October that these rules will be fast trackedwith guidance for automakers expected to appear before the end of the year.

But this new law could see implementation of those rules delayed. It will only require electric vehicles sold after December 31, 2025 to be assembled in North America, while also delaying domestic production requirements for mineral batteries and batteries.

Kia EV made in Georgia

Kia EV made in Georgia

The reported IRA has launched hyundai encourages fast-tracking U.S. EV production at their plant in Warnock’s state of Georgia. Hyundai since then confirmed to produce Kia EV at the plant and said it could expand the plant to produce 500,000 electric vehicles annually.

common enginewhich already makes some electric vehicles in the U.S. but likely won’t meet the battery sourcing requirements, recently noted that it still hopes to qualify for the $3,750 price tag at the start. year, plus the full amount of $7,500 over 2-3 years.

This extension appears to require unchanged price and income limits, so tax credits will remain more limited than before—and will add urgency to the arrival of affordable electric vehicles.

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