The proposal for new tax credits, which in the US essentially function as a subsidy for the purchase of an electric car, is awaiting approval by Congress. It is quite comprehensive and includes support for the purchase of a used electric car to help those who cannot afford a new car.
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However, in order for the buyer to be able to use the support, the car he buys must meet relatively strict criteria. Most importantly, at least 40% of the battery’s materials must come from North America or from countries that are US trading allies. This condition must be met by 2024.
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Five years later, the battery and its components must be 100% made in North America.
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In addition, batteries that contain minerals “mined, processed or recycled by a foreign entity of concern” are excluded from eligibility for the subsidy altogether. China, the largest global producer of batteries for electric cars, is among these worrisome foreign entities (orig. “foreign entity of concern” – it means, for example, an entity that has been designated as a terrorist, but it also includes four countries in total – Iran, North Korea, Russia and China – and entities under their jurisdiction).
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What does this mean for American electric car customers? Of the 72 models available on the local market, 70% do not qualify for subsidies precisely because of the origin of the battery. And none would meet the condition for 2029, writes The Verge website, which brings the news.
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China currently accounts for more than three-quarters of global EV battery production. Only about 8% is produced in the US. Ford, GM, Toyota and Stellantis are building battery factories in the United States, and it is also happening in Europe – only Volkswagen wants to build six factories in Europe. However, there is still the question of the source of materials for the production of batteries.
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According to the site, it is generally not unrealistic for a car to reach support. For example, the Tesla Model 3 has 65% of all parts from the USA or Canada, this car company has the Models S and 3 in the top ten of the index evaluating whether a car on the American market is “domestic”, i.e. made from parts coming from North America.
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But the battery is a different story than the mechanical parts, especially because of the need for rare materials. Chile has the largest known lithium reserves, Australia is the largest producer – however, refining and battery production are concentrated in China.
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The Democratic Republic of the Congo leads in cobalt, South Africa in manganese, and Indonesia produces the most nickel.
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For the sake of completeness, the proposed support for electric cars should be in the amount of $7,500 (180,000 crowns) in the form of a tax credit for the purchase of a new electric car that meets the requirements and costs up to $55,000 (1.3 million crowns) in the case of a passenger car or $80,000 (1.9 million crowns) in the case of a pick-up, SUV or van.
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The buyer must have an annual income of up to 150 thousand dollars (3.6 million crowns) in the case of a separate tax return, or up to 300,000 dollars (7.2 million crowns) in the case of a joint return, for example, of spouses.
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For used cars, the subsidy is reduced to $4,000 (96,000 crowns) and the buyers’ annual income limits are halved.
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