Japan Wins FTA Status Under New U.S. EV Tax Credit Rules

The US Treasury Department has released details of tax credit requirements for electric vehicles, including granting Japan a status on par with having a free trade agreement (FTA) with the US, Mainichi Japan reported.

Photo Insert: Japanese EVs will be eligible for US tax incentives even if critical battery minerals are processed in Japan as long as such vehicles are assembled in North America.

Under the rules to take effect on April 18, although the two countries have no FTA, Japanese EVs will be eligible for US tax incentives even if critical battery minerals are processed in Japan as long as such vehicles are assembled in North America, Kyodo News also reported.

The credits are aimed at promoting the administration of President Joe Biden's goal of making 50% of all new cars and light trucks sold in the US by 2030 electrified vehicles.

The new rules, meanwhile, will be introduced to help boost the domestic industry and reduce reliance on China for battery supply chains.

As part of efforts to fight climate change, Biden signed the Inflation Reduction Act in August last year, which offers consumers buying qualified EVs to receive a tax credit of up to $7,500.

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