Biden Administration Mulls Temporary EV Tax Credit Relief

The Biden administration is weighing temporary relief for automakers facing new EV tax credit rules tied to materials from foreign adversaries.

Author

Future Money
November 30, 2023

Five Second Summary:

The Biden administration is weighing temporary relief for automakers facing new EV tax credit rules tied to materials from foreign adversaries.

The Companies:

  • Tesla

  • General Motors

  • Ford

What's Happening:

  • The Biden administration is looking at phasing in enforcement of rules affecting EV tax credits.

  • The plan initially was to disqualify automobiles that use battery parts or minerals from China and other foreign adversaries from the full $7,500 incentive

  • Ongoing discussions with Treasury and Energy departments.

  • Potential major implications for automakers and consumers, as Tesla warns of impending credit reduction.

Numbers + Facts:

  • New rules deny tax breaks for EVs with foreign battery components or minerals from 2024 and 2025.

  • Aims to reduce dependence on China in the EV battery supply chain.

  • Treasury guidance expected to outline foreign entities of concern and foreign content allowances.

Looking Ahead:

  • Treasury's guidance to define entities of concern and foreign content allowances.

  • Possible impact on EV manufacturers' plans and the industry's trajectory.

  • Senator Joe Manchin's opposition could introduce legal complexities, shaping the future of EV subsidies and regulations.

  • Overall, this move highlights the difficulties that the US is facing onshoring and friendshoring its critical raw materials supply chain, in spite of the Inflation Reduction Act.