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5/3/2024

U.S. Department of the Treasury Releases Final Rules to Lower Consumer Costs, Continue U.S. Manufacturing Boom in…

U.S. Department of the Treasury Releases Final Rules to Lower
Consumer Costs, Continue U.S. Manufacturing Boom in Batteries
and Clean Vehicles, Strengthen Energy Security
May 3, 2024

WASHINGTON – Today the U.S. Department of the Treasury and Internal Revenue Service (IRS)
released final rules on the clean vehicle provisions of the Inflation Reduction Act (IRA) that are
lowering costs for consumers, spurring a boom in U.S. manufacturing, and strengthening
energy security by building resilient supply chains with allies and partners. Since President
Biden was elected, $173 billion in private-sector investment has been announced across the
U.S. clean vehicle and battery supply chain.
“President Bidenʼs Inflation Reduction Act has unleashed an investment and manufacturing
boom in the United States. Iʼve seen firsthand in Tennessee, North Carolina, and Kentucky
how ecosystems have developed in communities nationwide to onshore the entire clean
vehicle supply chain so the United States can lead in the field of green energy,” said Secretary
of the Treasury Janet L. Yellen. “The Inflation Reduction Actʼs clean vehicle credits save
consumers up to $7,500 on a new vehicle, and hundreds of dollars per year on gas, while
creating good-paying jobs and strengthening our energy security.”
“Todayʼs actions from Treasury and DOE provide clarity and certainty to an EV marketplace
thatʼs rapidly growing,” said John Podesta, Senior Advisor to the President for
International Climate Policy. “The direction weʼre headed is clear—toward a future where
many more Americans drive an EV or a plug-in hybrid and where those vehicles are a ordable
and made here in America.”
“Since his first day in o ice, President Biden has bet on America, invested in our
competitiveness, and stood with U.S. auto workers,” said Assistant to the President and
National Climate Advisor Ali Zaidi. “We are seeing the impact of that leadership. Under
President Biden, the U.S. went from laggard to leading the rest of the world in EV
manufacturing investment. EV sales have quadrupled. New factories are opening up, including
15 gigafactories commissioned to bring back jobs manufacturing batteries invented here in
America. Driven by the Presidentʼs vision and leadership, the sector is experiencing a
manufacturing boom – and itʼs reaching every corner of the country. These credits for clean
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U.S. Department of the Treasury Releases Final Rules to Lower Consumer Costs, Continue U.S. Manufacturing Boom in…

vehicles are the latest action by the Biden-Harris Administration to save consumers
thousands of dollars and ensure the future of the auto industry is made in America by
American workers.”
The final rules being issued today strengthen and secure supply chains and provide certainty
for manufacturers and taxpayers. A er careful consideration of the extensive public feedback
received in response to the proposed rules, the Treasury Department and the IRS are
providing definitions and rules regarding taxpayer and vehicle eligibility for the credit for new
clean vehicles and the previously-owned clean vehicle credit. The rules also address the
critical minerals and battery components requirements and Foreign Entity of Concern (or
“excluded entity”) restriction that were added to the clean vehicle credit by the IRA.
Concurrently with todayʼs final rules, the Department of Energy (DOE) is also releasing final
interpretive guidance related to the definition of Foreign Entity of Concern for purposes of
the 30D clean vehicle credit and the battery manufacturing grant program created by the
Bipartisan Infrastructure Law.
Todayʼs release also includes rules for transferring the 30D clean vehicle credit of up to $7,500
and 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This
mechanism created by the IRA is already extending the reach of the credits by making the
credit available at the point of sale rather than when buyers file their taxes. Researchers have
found that consumers overwhelmingly prefer an immediate rebate at point of sale. So far this
year, more than 100,000 credits have been transferred at the point of sale, representing more
than $700 million in upfront savings for consumers.
These rules provide for robust program integrity measures, including upfront review of
compliance with both critical mineral and battery component requirements and the FEOC
restrictions starting this summer. The IRS, with analytical assistance from DOE, will conduct
upfront review of documentation and certifications addressing materials sourcing
requirements to ensure that qualified manufacturers are accurately representing their battery
contents. In addition, the final rules confirm that taxpayers may rely on vehicle eligibility
information provided by manufacturers so that taxpayers are not penalized for manufacturers
mistakes.

CALCULAT ING $3,750 CRIT ICAL MINERALS CREDIT
For determining qualifying critical mineral content for purposes of the critical minerals
requirement, todayʼs release provides a new test, the traced qualifying value add test. Under
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U.S. Department of the Treasury Releases Final Rules to Lower Consumer Costs, Continue U.S. Manufacturing Boom in…

this test, manufacturers must conduct a detailed supply chain tracing to determine the actual
value-added percentage for extraction, processing, and recycling. The actual percentage is
used to determine the value for the applicable critical mineral that is qualifying. Manufacturers
may continue to use the 50 percent roll up described in the proposed regulations as a
transition rule until 2027.

F OREIGN ENT IT Y OF CONCERN
For the Foreign Entity of Concern (FEOC) restriction, the final regulations make permanent
the allocation-based accounting rules for applicable critical minerals contained in a battery
cell. The final regulations also identify certain impracticable-to-trace battery materials. As
tracing standards and capabilities develop, qualified manufacturers may temporarily exclude
these battery materials from FEOC due diligence and FEOC compliance determinations until
2027.
To take advantage of the FEOC transition rules for impracticable-to-trace battery materials,
qualified manufacturers must submit a report during the upfront review process noted above,
demonstrating how the qualified manufacturer will comply with the FEOC restriction once the
transition rule is no longer in e ect.
Clean Vehicle Credit Requirement

2024

2025

YES

YES

NO

YES

Battery Component Applicable Percentage (to receive $3,750)

60%

60%

Critical Minerals Applicable Percentage (to receive $3,750)

50%

60%

Foreign Entity of Concern Restriction for Battery Components
(to receive any credit)
Foreign Entity of Concern Restriction for Critical Minerals
(to receive any credit)

The Biden-Harris Administration is committed to using every tool available to build secure,
resilient, trusted supply chains for EVs and EV batteries, and to creating good-paying and
union jobs throughout the EV supply chain in the United States. The White House, working
with the Department of Treasury and Department of Energy, intends to convene domestic
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U.S. Department of the Treasury Releases Final Rules to Lower Consumer Costs, Continue U.S. Manufacturing Boom in…

critical minerals producers, battery manufacturers, and automakers in the coming weeks to
identify additional opportunities to accelerate growth in this sector in the United States,
including through o ake agreements between domestic critical mineral producers and
battery and EV manufacturers.
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