EV makers get two-year reprieve on tax-credit restrictions

livemint.com:

The Biden administration softened its proposed limits on tax credits for electric vehicles, letting consumers get up to $7,500 for cars containing Chinese graphite through 2026. That is a two-year extension before some of the most stringent supply-chain requirements kick in. The reprieve gives car manufacturers an easier than expected path to make and sell vehicles eligible for the full tax credit.

The Treasury Department made the change Friday as it published final rules governing the tax credits, which are designed to encourage EV production and push supply chains for minerals and batteries into the U.S. “These actions provide certainty and clarity to a marketplace that’s already growing rapidly," said John Podesta, the White House clean-energy adviser. Congress expanded EV tax credits in the 2022 law known as the Inflation Reduction Act, aiming to spur rapid electrification of the passenger-automobile fleet.

Those benefits came with a catch, including a series of escalating requirements that the vehicles exclude critical minerals and other materials from some foreign countries, including China. Like other IRA incentives, the EV tax credits are serving several goals simultaneously, and sometimes work at cross-purposes. Tighter battery-content limits can help spur domestic industry, but they also will slow EV adoption.

The graphite restriction was set to take effect in 2025, and because most graphite comes from China, the number of EVs eligible for the tax credit was expected to plummet. After industry officials objected, the Treasury Department relented. The government determined that it was too difficult to trace the origin of graphite, particularly because natural graphite is often mixed with synthetic graphite made