This New EV Tax Rule Could Cost Some Buyers Thousands In Credits – SlashGear

As part of the new rules, the battery inside an electric vehicle must have at least 40% of its minerals (by value) processed on US soil or sourced from a friendly country that has trade ties of a special kind with the United States of America. With each passing year, that percentage will rise by 10%, reaching the 80% threshold in 2027, and rising further until 2029. The idea is to break away from China’s dominance in the EV battery market, which happens to be a global hub of industrial battery processing and supply. Under President Biden’s governance, the focus is on developing the United States’ own EV capabilities, starting from material sourcing to design and manufacturing.

The second criterion pertains to battery component share. As part of the revised proposal, 50% of a battery’s component must have been assembled or manufactured on US soil for a car to qualify for the clean vehicle tax rebate. As mentioned above, once the proposal goes into effect, the number of vehicles that will be eligible for the tax credit will go down, but officials say this will only be a temporary change. In the years to come, as the US ramps up its own EV component processing and car manufacturing facilities, the number of eligible vehicles will go up. But for now, EV buyers will feel the sting or have their choices narrowed down to even fewer models than before.