New Biden Administration Rules Could Limit EV Tax Credits

The rules aim to encourage U.S. auto-supply chains and reduce dependency on foreign sources for critical minerals, but could still benefit Chinese firms linked to China's government.

New rules proposed by the Biden administration could limit the full $7,500 federal tax credit for electric vehicles (EVs) if they contain battery materials from countries considered hostile to the U.S., including China.
The rules are part of Biden's climate law and aim to encourage the development of auto-supply chains in the U.S. and reduce dependency on foreign sources for critical minerals needed to produce EV batteries.
Despite the new rules, Chinese firms linked to China's government could still benefit from taxpayer subsidies through indirect means such as joint ventures and investments, partnerships, and licensing deals with U.S. companies.
China currently dominates the EV supply chain, producing about 75% of all lithium-ion batteries worldwide and boasting significant production capacity for cathodes, anodes, and critical minerals vital for EV batteries.
The Treasury Department has also outlined other requirements for EVs to be eligible for tax credits, including a certain percentage of critical minerals contained in an EV's battery must have been extracted or processed in the U.S. or a country the U.S. has a free trade agreement with.