The United States is giving electric car makers eligible for state subsidies two additional years to modify their supply chains, allowing them to source Chinese graphite until 2026, the government announced on Friday, May 3.
Washington is seeking to reduce its nascent electric vehicle industry’s dependence on archrival China. New rules went into effect this year restricting Chinese-origin materials allowed in electric vehicle batteries that qualify for tax credits of up to $7,500.
Two more years to improve material supply
And starting in 2025, an eligible clean vehicle will no longer be able to contain critical minerals from companies controlled by a “foreign entity of interest” such as China, Russia or North Korea. But the Treasury Department on Friday gave automakers two more years to improve the supply of materials like graphite, whose origins are difficult to trace.
“The final rules issued today strengthen and secure supply chains and provide clarity for manufacturers and taxpayers,” the Treasury Department said.
The Treasury Department and Internal Revenue Service (IRS) release of final rules related to clean vehicles is part of President Joe Biden’s climate action plan, the Inflation Reduction Act (IRA).
John Bozzella, president of the Alliance for Automotive Innovation, a Washington lobby that represents automakers, said the rules “appear to recognize the realities of the global supply chain.” According to him, they offer “temporal flexibility in terms of the origin of critical minerals in electric vehicle batteries.”
“This is helpful as more and more automotive supply chains and battery production are located in the United States and our allies,” he added. But John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, warned that the rule, in his view, reinforces the country’s dependence on China, and urged the Biden administration to “go back.”
Source: BFM TV
