USA And Japan Sign Trade Deal On EV Battery Minerals
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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.
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Why does this country continually bend over backwards to appease the Japanese? Seriously? Why? The best part of that bill was that it, for once, actually encourages people to buy American brands and support the American companies instead of constantly pumping billions of dollars back into Japan and Korea.
Until the day arrives where Japan opens it’s markets 100% fully to US brands and products, the US should not bend to their sniveling. I wish to be on record stating that in no way do I ever want any of the tax money I pay to subsidize Japan. Never.
No fan of the IRA, but at least it encouraged all automakers to source and build in North America and stopped penalizing early adopters like GM and Tesla (who both surpassed 200k sales years ago) by making them again eligible for the tax credit. This agreement will also be in place with S Korea and the EU after their incessant whining. 1/2 of the credit is dependent upon NA assembly and the remainder is content source. The IRS is supposed to provide guidelines on battery material source and content restrictions April 1st and if they actually stick to the letter of the law (doubtful), then only a small fraction of the foreign OEMs will be eligible as their batteries are sourced from China. I have little faith in bureaucrats doing anything remotely constructive.
mvb: Actually, I like the IRA bill just the way it was originally written. It needs to stay that way.
Absolutely zero US tax payer money should ever go to Toyota, Honda, Nissan, Mazda, Subaru, Kia, Hyundai, Vinfast or any other import brands. Period, end of story. If those companies bi**h, then let’s force them to truly open their markets to our US products. Until then, no go.
If EVs are the future, fine, but please let the market decide, and not the government.
Also, all manufacturers INFLATE their prices on their EVs while they are eligible, by about the amount of the incentive.
Why would GM help competitors access its own market?
I totally agree with you Dan B..
The Japanese do nothing but take as much as our government is willing to give them.
They will not trade equally with the USA and love to take advantage of us economically.
We won the war and have allowed them to walk all over us in every way possible since.
Please support American products and American workers!
America 2023 is DOA
Won’t this take away the main point of the IRA when it comes to BEV’s….The Mining in America is very crucial Part?