WASHINGTON, Dec 3: The US government proposed new rules Friday regarding its electric vehicle subsidies, setting limits on material that producers can source from China or other rival countries.
The guidelines spell out how electric vehicles (EVs) could qualify for a tax credit of up to $7,500 under President Joe Biden's landmark climate action plan, the Inflation Reduction Act (IRA).
They come as Washington works to reduce its burgeoning electric car industry's reliance on China.
Under the latest proposal released by the Treasury Department on Friday, an eligible clean vehicle cannot contain battery components made or assembled by a "foreign entity of concern" starting next year.
From 2025, a qualifying vehicle also cannot contain critical minerals extracted, processed or recycled by such entities.
This targets companies owned by, or subject to the jurisdiction of countries like China, Russia, North Korea and Iran. They would be barred from providing such materials to vehicles aiming to qualify for tax breaks.
A firm could be considered a foreign entity of concern if it were incorporated in one of these countries, or if it hit a 25 percent ownership threshold.
The rules have the effect of limiting Chinese companies' roles in the supply chain for US electric vehicles, as Washington aims to move more production into the United States.
Currently, the key electric vehicle industry is dominated by China. �AFP
