Regulation

The Inflation Reduction Act - Guidance for EV brands

What does the US Inflation Reduction Act mean for the EV and battery industry?

The US is among the top-3 largest EVs markets with 630,000 electrical vehicles sold in 2021. EVs are considered one of the most important industries for the clean energy transition. To stay competitive, the US administration pushed through new legislation focused on climate change, and set requirements for EV batteries and critical minerals to boost domestic EV production.

The Inflation Reduction Act (the IRA) is one of the largest climate regulations in the United States that aims to drive domestic EV production by providing tax credits of up to $7,500 to consumers - if the vehicle meets certain value, type, and battery material and component requirements.

Does my EV brand qualify for the tax credit?

Not all EV producers qualify for the tax credits. The companies have to meet value, type, and battery material and component requirements. The tax credit consists of two parts:

A threshold of critical minerals in the EV battery

Part 1, or $3,750 of the $7,500, can be achieved by meeting a requirement of a certain threshold of critical minerals in the EV battery that are extracted or processed in the U.S., countries that the U.S. has a free trade agreement with, or have been recycled in North America. The battery minerals also must meet certain purity requirements to qualify.

A percentage of the battery’s components manufactured or assembled in North America

Part 2, or the remaining $3,750 of the $7,500, is achieved if the percentage of the value of the battery’s components that were manufactured or assembled in North America exceeds thresholds of 50% through the end of 2023 and increases by 10% per year to 100% in 2029 and beyond.

The “percentage of the value” of the applicable battery critical minerals extracted or processed in the US or a US free-trade partner or recycled in North America, should be:

2024

40% for a vehicle placed in service before 1 January 2024;

2024

50% for a vehicle placed in the service during calendar year 2024;

2025

60% for a vehicle placed in service during calendar year 2025;

2026

70% for a vehicle placed in service during calendar year 2026;

2026

80% for a vehicle placed in service after 31 December 2026.

IRA Compliance doesn’t have to be difficult.

Prepare to secure the clean vehicle credit in 3 months, with Minespider Regulation Readiness Package. Including:

Readiness Report showing how your business processes, ESG, and Supplier processes line up with the requirements of the regulation.

A technical gap analysis, showing any gaps that you need to rectify.

A knowledge base; an increased understanding of the wider context of battery passport requirements and the environment surrounding them through knowledge transfer documents, workshops, and discussions.

A scaling-up roadmap, that will guide you through the steps you need to take before the regulation comes into full force in 2026. Includes integration for battery passports with your legacy systems.

A full battery passport simulation and training in both manual and automated creation processes.

Demos, documentation, and a video to showcase the project internally.

There are 50 “applicable critical minerals”
The US has 20 free-trade partner countries

Build a sustainable supply chain with Minespider

To comply with regulations and get a competitive advantage, EV producers have to know their supply chain and where all materials come from. The Minespider solution for supply chain traceability and optimization can help you communicate all the important data throughout the whole supply chain, from production to recycling, and make sure your company and suppliers meet key regulatory requirements.

Battery Passport, a traceability tool for every stakeholder in the battery supply chain.

The Battery Passport

The Battery Passport is a digital copy of the EV battery that contains information about materials, quantity, and the country origin. With the Battery passport, you can create traceable and recyclable batteries, map all battery components and have all important data about carbon footprint and ESG metrics on one platform.

Prove that you comply with the IRA’s requirements and track critical materials across the EV battery supply chain.

Join us in building sustainable growth.