The United States Has Released Subsidy Details For The White List Of Power Batteries And Has Ambitious Plans To Build Its Own Industrial Chain

On March 31st local time, the US Treasury Department issued guidance on battery procurement requirements for electric vehicle tax credits (hereinafter referred to as the "Guidance"), clarifying the details of the subsidy policy for electric vehicles in its Inflation Reduction Act. The Inflation Reduction Act is considered a "white list" for power batteries in the United States, making guidance a key factor for leading companies in the industry chain to explore the US market.
In August 2022, US President Biden officially promulgated the Inflation Reduction Act, which plans to provide federal tax credits of up to $7500 per vehicle for electric vehicles assembled in North America, but with strict requirements.
In terms of tax credit methods, the guidance divides the tax credit of $7500 into two equal parts, corresponding to key mineral requirements and battery component requirements, with each item eligible for a tax credit of $3750 per vehicle. If both are met, a full tax credit of $7500 per vehicle can be obtained.
In terms of standards, the guidance requires that at least 40% of key minerals such as lithium, nickel, manganese, graphite, and cobalt in power batteries must be extracted, processed, or recycled in the United States or countries with free trade agreements with the United States. This proportion will increase year by year, reaching 50% by 2024 and 80% by 2029. At the same time, the guidance defines the positive and negative electrode materials of power batteries as key minerals of batteries, rather than battery components.
Currently, eligible countries include Australia, Bahrain, Canada, Chile, Colombia, Japan, etc. The European Union and the United Kingdom do not yet qualify.
Analysts point out that although the electric vehicle market in the United States has a huge space for electrification, the local industrial chain is very scarce. This move by the United States aims to require domestic and foreign enterprises to transfer their production bases to the United States to build their own electric vehicle industry chain. At the same time, American car companies may reduce upstream procurement costs and strive for a competitive advantage.
It is worth noting that the "White List of Power Batteries" in the United States has increased uncertainty risks for Chinese power battery companies to build factories in the United States.