Treasury Delays Guidance On EV Batteries Until March Keeping More Cars Qualified for Tax Credits

Mandatory Credit: Photo by RAJAT GUPTA/EPA-EFE/Shutterstock (13619144m)US Treasury Secretary Janet Yellen speaks during her visit to the Microsoft India Development Centre in Noida, Uttar Pradesh, 11 November 2022.

The Treasury Department announced a timeline for providing additional information on key tax provisions of the Inflation Reduction Act (IRA), in an effort to provide “clarity to consumers and businesses, that, beginning Jan.1, 2023, will be able to access tax benefits from many of the law’s climate provisions,” according to a Dec. 19 statement. 

President Joe Biden signed the IRA into law on Aug. 16, which included sweeping legislation that addresses climate, energy and healthcare issues. One of the key provisions of the act is to provide tax credits of up to $7,500 to electric vehicle (EV) owners.

But now, the Treasury Department said that it would delay the guidance for the sourcing of EV critical minerals and battery components requirements until March. 

EVs need to meet these requirements to qualify for the tax incentives under the IRA. 

Right now, Americans can receive a tax credit of up to $7,500 for purchasing a new EV, with the caveat that the vehicle must be assembled in North America, and must be purchased and delivered on or before Dec. 31, 2022, according to the administration’s website,, which it put in place in September to help Americans navigate the IRA’s green energy taxes easier.

And beginning next year, “income-qualified households” will be able to receive a tax credit of up to $7,500 for new vehicles, as long as the EV is assembled in North America and has a battery that meets certain sourcing requirements. 

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“By statute, the critical mineral and battery component requirements take effect only after Treasury issues that proposed rule. Additional guidance on clean vehicles for consumers and manufacturers is forthcoming.” The Treasury Department said in the Dec. 19 statement.

As CNBC reported, this means that EVs that are not expected to comply with the new standards will continue to be eligible for the credits until the proposed guidance is issued and continue to be eligible for the beginning of the year. 

Under the IRA, for the $3,750 credit, 40% of the battery must be extracted or processed in the U.S. or in a country where the U.S. has a free-trade agreement — the percentage would increase to 80% in 2027, according to the text of the law. 

The other $3,750 credit would apply if 50% of the battery’s components are manufactured or assembled in North America — this requirement would increase to 100% in 2029. 

Some carmakers have argued that the new rules are too stringent given the supply chain bottlenecks. For example, Hyundai has been lobbying to reverse some of these requirements. The carmaker’s COO and global president Jose Munoz said that the IRA would be a “huge blow to the automaker’s bottom line,” according to CNBC

“It will be very, very astronomical if nothing happens, if nothing changes. The impact is huge,” Munoz said in October. “That’s why we’re taking actions through all the channels.

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Finally, the Treasury said it will provide information on tax provisions of the IRA before year’s end on the tax credit for energy-efficient home improvement projects and residential energy property; initial guidance on the Corporate Alternative Minimum Tax (CAMT); and initial guidance on the excise tax on stock buybacks.

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