President Biden’s administration has specified new restrictions that will impact how many electric vehicles sold in the U.S. are eligible for tax credits under the Inflation Reduction Act based on the origin of their battery materials.
From January 1, 2024, electric vehicles will be ineligible for any of the $7,500 in federal EV tax credits if any of the battery components are made or assembled in what the U.S. considers a ‘foreign entity of concern,’ (FEOC) including China, Iran, North Korea, and Russia. This exclusion will grow in 2025 to include any critical minerals used in an EV’s battery extracted, processed, or recycled by one of these FEOCs.
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