Interpreting IRA Clean vehicle tax credit - 2022 vs 2023 deliveries

[metroshot]

https://crsreports.congress.gov/pro...M23P1f2Uqm75SY_Xjwk38A6v9vGiXoGzZcZTl0w0OtdwE

So reading about the battery components qualification for the credit..

My question: for 2023 - do I read it correctly that the components part comes into play after 2023 ?

After 2023, the foreign parts components would negate the tax credit ?

But during 2023, it's OK ??

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[SmokingtheMeats]

"Beginning in 2023, EVs qualify only if the vehicle’s battery meets certain conditions."

It says that in the very next sentence.

I believe you are misinterpreting the "foreign entity of concern"

 

[cvalue13]

I believe you are misinterpreting the "foreign entity of concern"

My question: for 2023 - do I read it correctly that the components part comes into play after 2023 ?

as @SmokingtheMeats said, you’re conflating two different qualifications.

by no later than 1/1/2023, both a battery minerals requirement (40% in ‘23) and battery component assemblage requirement come into play, each of satisfying qualifying for $3,750 in credit.

separately, in 2024, is a complete prohibition on battery materials or assemblage from an entity Of concern (basically, Russia, China, Iran, and companies owned/controlled by them).

 

[JBauer]

Odds are good the 2023 F150 credit will max out at $3,750 then.

 

[Obsesso]

Odds are good the 2023 F150 credit will max out at $3,750 then.

From the battery component part? At this point the manufacturers are completely opaque regarding their battery (or minerals) qualifying or not.

Then there is the price issue, all long range lightings are >80k, making them that much more expensive since no rebate/credit.

 

[Nick Gerteis]

Odds are good the 2023 F150 credit will max out at $3,750 then.

Of course nobody likes that, I don’t either, but in the long run it will help establish/enhance a domestic battery supply chain. That is something we can and should all support instead of buying from our global adversaries. Worth a few grand to me!

 

[Nick Gerteis]

From the battery component part? At this point the manufacturers are completely opaque regarding their battery (or minerals) qualifying or not.

Then there is the price issue, all long range lightings are >80k, making them that much more expensive since no rebate/credit.

I think this the critical section of the report on the IRA:

“The maximum potential credit is the sum of two amounts: the critical mineral amount and the battery component amount.
 Critical Minerals ($3,750): Starting in 2023 (and after the Treasury issues guidance on this requirement), to qualify for this portion of the credit, at least 40% of the value of the battery’s applicable critical minerals must have been extracted or processed in the United States or in a country with which the United States has a free trade agreement, or recycled in North America. The 40% amount increases to 50% in 2024, 60% in 2025, 70% in 2026, and 80% in 2027 and thereafter.
 Battery Components ($3,750): Starting in 2023 (and after the Treasury issues guidance on this requirement), to qualify for this portion of the credit, at least 50% of the value of the battery’s components must have been manufactured or assembled in North America. The 50% amount increases to 60% in 2024 and 2025, 70% in 2026, 80% in 2027, 90% in 2028, and 100% in 2029 and thereafter.”

So we’ll need two additional pieces of information: the guidance that the Treasury will issue, and battery mineral sourcing and assembly % that the manufacturers would have to provide. Kinda frustrating for us to not have the full picture available.

 

[JBauer]

From the battery component part? At this point the manufacturers are completely opaque regarding their battery (or minerals) qualifying or not.

Then there is the price issue, all long range lightings are >80k, making them that much more expensive since no rebate/credit.

Right, there’s 0 chance we meet the minerals requirement, but battery and final assembly is likely done in the US, so 50% credit tops. 0% if you buy an ER.

It’s not gospel, but there have been articles that Ford and VW source their batteries from SK in Georgia.

 

[cvalue13]

It’s not gospel, but there have been articles that Ford and VW source their batteries from SK in Georgia.

Are you mentioning this to support the idea that there’s 0 chance of meeting minerals req, or are you mentioning it to support that manufacturing requirement is met?

Meanwhile, it seems pretty tough to find 0% certainty in the minerals requirement. There seems a good amount of wiggle-room left for the IRS’s interpretation, and as we speak US-assembled BEV manufacturers are lobbying the IRS for favorable interpretations based on existing facts.

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