Restrictions for EV Tax Credits for Chinese Minerals on House Agenda
A bill that passed out of the House Ways and Means Committee that would make consumer tax credits for electric vehicles more restrictive is on the schedule for a vote next week.
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The bill, introduced by Rep. Carol Miller, R-W.Va., would effectively overrule the Treasury Department's implementation of the foreign entity of concern restrictions for battery components and critical minerals.
Those restrictions, which make either $3,750 or all of the consumer tax credit unavailable, even for EVs assembled in North America, say that certain low-value battery materials aren't traceable, and therefore there needs to be a transition period.
Miller's bill says all materials mined, processed, recycled, manufactured or assembled by China, "including low-value minerals or battery materials for which the origin/source may be hard to trace," will mean no tax credit.
The Treasury rule (see 2312010005) didn't make clear how U.S. firms licensing designs from Chinese firms would be treated. Congress was critical of Ford's decision to use CATL technology in its Michigan battery plant; "this legislation is needed to expand the [foreign entity of concern] limitations to prevent batteries designed, manufactured, or produced using any process attributable to any licensing, royalty, service contract, or similar agreements with a prohibited entity from being eligible for the credit," the committee report said.
The Joint Committee on Taxation estimated that the federal government would save $601 million in tax credits paid out to dealers and would increase tax revenues by $59 million from manufacturers between 2024 and 2034.
The bill is estimated to increase federal fiscal year budget receipts by $660 million for the period 2024 through 2034.