As GM and the broader automotive industry move towards an all-electric future, the U.S. is supporting the EV transition by defining and strengthening support for underlying EV supply chains. That includes the minerals required to build EV batteries, and now, the U.S. and Japan have just announced a new trade deal that is expected to grant Japanese automakers wider access to a new $7,500 U.S. EV tax credit.
According to a recent report from Reuters, which cites unnamed senior Biden administration officials, the new trade deal prohibits the two countries from enacting bilateral export restrictions on critical EV battery minerals, including cobalt, graphite, lithium, manganese, and nickel.
The deal also seeks to reduce reliance on Chinese sources for these materials though required collaboration against “non-market policies and practices” of other countries in the sector, while also holding foreign investment reviews with regard to EV mineral supply chains.
The deal, and others like it, is expected to provide Japan and other U.S. allies with access to the $7,500 EV tax credit included in the Inflation Reduction Act (IRA) passed last year. While half of the credit is aimed at vehicles assembled in North America, the other half requires that at least 40 percent of the minerals used in the EV battery is extracted or processed in either the U.S. or a country with which the U.S. has a free trade agreement. The minerals may also be recycled in North America.
The U.S. Treasury is expected to provide guidance on EV tax subsidy requirements by the end of the week. According to trade minister Yasutoshi Nishimura, EVs made with minerals that were either mined or processed in Japan are expected to meet the tax exemption requirements under the IRA.
Going forward, the recent EV minerals trade deal between the U.S. and Japan will undergo review every two years, and may be either amended or terminated as deemed neccessary.