Biden administration is reportedly discussing granting automakers temporary relief from the rules devised to cut EV tax credits depending on whether the manufacturing process involves materials from foreign rival countries, including China.
What Happened: Administration officials have discussed slowing the enforcement of the rules, Bloomberg reported, citing Democratic senator Debbie Stabenow.
"We're in ongoing discussions," Stabenow said as per the report while adding that she, too, extended support for the automakers.
Under the guidelines included in Biden’s climate law, the EV tax credit amount will depend on whether the vehicle meets the critical mineral and/or battery component requirements from ‘foreign entities of concern.’ If a vehicle meets both requirements, it may qualify for the full $7,500 credit, while a vehicle that meets either requirement alone would be eligible for a $3,500 credit. Vehicles not meeting either requirement will not be eligible for the credit. The regulations aim to reduce the U.S. EV segment’s reliance on China.
As per the report, guidance is expected this week from the treasury department on what nations are identified as foreign entities of concern and how much content from these foreign nations can be included to be eligible for the tax credit.
Why It Matters: The decision will significantly impact the EV industry and its several players, including leading automakers. Tesla Inc TSLA has already warned customers that the EV tax credit on its Model 3 vehicles might be halved after this year.
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