U.S. Allows Japan Materials In EV Tax Credit Scheme

Washington and Tokyo are preparing to make Japanese vehicles eligible for tax credits in a US initiative for electrified vehicles that use critical minerals from the US or countries that it has free trade agreements with, sources familiar with the talks said, Kyodo News reported.

Photo Insert: Japanese firms play a major role in processing minerals for electric vehicle production.

Under the changes, the US would relax the rules to allow EVs to contain key minerals provided by Japanese companies, such as parts makers, despite Tokyo not holding a free trade agreement with Washington.

Promoting EV uptake is a key U.S. government policy. As part of its Inflation Reduction Act passed in August 2022, it offers tax credits of up to $7,500 on purchases of electrified vehicles that come off North American assembly lines and in which a certain amount of battery-critical minerals are sourced or processed domestically or from free trade agreement countries.

Japanese firms play a major role in processing minerals for electric vehicle production. The changes are expected to be announced by the US Department of the Treasury this month and take effect immediately, they said.

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