What: The Clean Vehicle Credit and upcoming proposed regulations
Why: Stringent battery sourcing requirements for the Clean Vehicle Credit will go into effect on April 18, due to the upcoming publication of proposed regulations. For 2023, 40% of a vehicle’s battery critical minerals must come from the U.S. or a country with which it has a free trade agreement, or be recycled in North America, to be eligible for $3,750 of the credit, and 50% of a vehicle’s battery components must come from North America to be eligible for the other $3,750 of the credit. These percentages will increase over time. The proposed regulations provide guidance on how manufacturers must comply with these requirements. Importantly, the critical mineral requirements, thought to be the most difficult to meet, have “transition rules” built in, to ease implementation and provide time for changes in supply chains.
The proposed regulations do not answer all the open questions for the Clean Vehicle Credit. Some crucial questions remain open, for example, regulations regarding foreign entities of concern, the ability to transfer credits to dealers for a rebate on the vehicle, and how the “transition rules” for critical minerals will play out over time. The Clean Vehicle Credit may have more twists, turns, and confusion ahead for consumers and manufacturers, but at least for the time being, there is a helpful roadmap.
Who: Anne H. Gibson, J.D., LL.M., Senior Legal Analyst at Wolters Kluwer Legal & Regulatory U.S
“The Clean Vehicle Credit has been both one of the most exciting aspects of the Inflation Reduction Act for consumers and also one of the most vexing. Manufacturers have been wrestling with how they will comply. The proposed regulations offer welcome guidance.”
To read the full piece, also available on VitalLaw®, visit: Battery sourcing requirements for the Clean Vehicle Credit go into effect April 18, excluding many vehicles from eligibility
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Contact: To arrange an interview on the Clean Vehicle Credit, please contact Linda Gharib at [email protected].
