The Inflation Reduction Act (IRA) of 2022 includes critical minerals provisions that affect eligibility for the Clean Vehicle Tax Credit (Section 30D). The IRA requires that a specified percentage of the critical minerals in an EV battery be extracted or processed in the US or a free trade agreement (FTA) partner country, or recycled in North America.
Critical Minerals Percentage Requirements
To qualify for the full $7,500 EV tax credit, a vehicle must meet both a critical minerals requirement and a battery components requirement. For the critical minerals requirement: 40% of the value of the critical minerals in the battery must be extracted or processed in the US or an FTA partner country, or recycled in North America in 2023; rising to 80% by 2027.
Foreign Entity of Concern (FEOC) Restrictions
From 2024, EVs are ineligible for the tax credit if any battery component is manufactured or assembled by a Foreign Entity of Concern (FEOC). From 2025, EVs are ineligible if any critical mineral in the battery was extracted, processed, or recycled by an FEOC. FEOCs include entities owned by or subject to the jurisdiction of China, Russia, North Korea, or Iran.