US officials expanded access to clean vehicle subsidies in proposed guidelines released Friday, allowing electric vehicles that use critical minerals collected and processed in Japan — and potentially the EU to also benefit from incentives.
President Joe Biden‘s ambitious climate action plan, the Inflation Reduction Act (IRA), funnels some USD 370 billion into subsidies for America’s energy transition, including tax cuts for US-made electric vehicles (EVs) and batteries.
Guidelines released Friday by the Treasury Department spell out requirements that EV batteries have to meet for vehicles to qualify for a full USD 7,500 consumer tax credit.
While the IRA stipulates that a percentage of critical minerals in the battery must be sourced from America or countries it has free-trade pacts with — initially leaving Japan and the European Union in the cold — Friday’s announcement signals room for maneuver.
“This term could include newly negotiated critical minerals agreements,” said the Treasury Department in a statement.
It added that 21 countries, Japan among them, are included.
The confirmation comes days after the United States and Japan unveiled a deal on critical minerals trade to reinforce supply chains in a sector dominated by China.
This opens doors for a similar pact with the EU, which could ease US tensions with the bloc.
European leaders have been concerned that EU-based energy and auto companies will be shut out or move to the United States, and both sides are currently in talks for a targeted critical minerals deal.
