electric vehicles

On August 16, 2022—one year ago today—President Biden signed the Inflation Reduction Act (“IRA”), the most significant clean energy and climate law in U.S. history.  As we described in a series last summer, the IRA created durable tax credits and other fiscal programs to revitalize domestic manufacturing and incentivize clean energy solutions in nearly every sector of the economy. The IRA’s one year anniversary is a key opportunity to take stock of what the law has propelled and what is expected around the corner.…

Continue Reading The First Year of the Inflation Reduction Act

Funding incentives under the U.S. Inflation Reduction Act of 2022 (IRA) to transition to a clean energy economy are unleashing opportunities for key U.S. allies and partners around the world. In particular, tax credits exceeding 10% of the price of average electric vehicle (EV) sold in the United States are leading to new investments in Mexico and Canada, and have triggered high-level political negotiations from U.S. partners such as the European Union and Japan.…

Continue Reading Global Spotlight: the IRA’s Implications for Key U.S. Allies

Today, the Department of the Treasury and IRS made available for public inspection proposed regulations on the new clean vehicle credit under the Inflation Reduction Act of 2022, as codified in section 30D of the Internal Revenue Code.  These proposed regulations will be published in the Federal Register on April 17, 2023, and the due date for comments will be 60 days after the publication (or Friday, June 16, 2023).…

Continue Reading Much-Anticipated Proposed Regulations on the 30D EV Tax Credit Have Finally Arrived—but Leave a Key Question Unresolved

Background

Later this week the Department of the Treasury is expected to release guidance on the Inflation Reduction Act (IRA)’s EV tax credit under section 30D of the Internal Revenue Code.  Highly consequential for the guidance and practical availability of the credit will be how Treasury interprets the term “foreign entity of concern.”  This is because Section 30D(d)(7) excludes from credit eligibility vehicles that are:

  • placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle . . . were extracted, processed, or recycled by a foreign entity of concern; or
  • placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle . . . were manufactured or assembled by a foreign entity of concern.

Meanwhile, last week, Treasury and the Commerce Department released proposed regulations (here and here, respectively) that interpret “foreign entity of concern” for purposes of various incentive programs under the CHIPS & Science Act (CHIPS Act).  Because the IRA’s definition of “foreign entity of concern” mirrors the CHIPS Act’s definition of “foreign entity of concern” interpreted by Commerce, and because Treasury cross-referenced Commerce’s interpretation of “foreign entity of concern” in Treasury’s CHIPS Act guidance, it is reasonable to wonder whether Treasury will adopt the same interpretation of “foreign entity of concern” for purposes of the EV credit exclusion in section 30D(d)(7). 

If it does, there could be a dramatic diminution of vehicles eligible for the EV credits.  Under Treasury’s proposed CHIPS Act regulations, a foreign entity of concern would include, inter alia, (i) any entity organized under the laws of China or having its principal place of business in China, and (ii) any entity organized outside of China 25% or more of whose voting interests are owned by the Chinese government (as in the case of foreign subsidiaries of Chinese state-owned entities (SOEs)).  If that interpretation is used for purposes of section 30D, absent a nearly impossibly fast elimination of Chinese critical minerals and battery components from the EV supply chain, the number of vehicles eligible for the 30D EV credit will sharply decrease in 2024 and will be practically eliminated in 2025. 

EV manufacturers and suppliers may wish to flag this concern to Treasury.…

Continue Reading Will Treasury Adopt the Same Interpretation of “Foreign Entity of Concern” for both the Section 48D Credit under the CHIPS Act and the Section 30D Credit under the Inflation Reduction Act?

On February 21, 2023, the Federal Highway Administration (“FHWA”) published a Notice of Waiver for Buy America requirements related to Electric Vehicle (“EV”) Chargers, 88 Fed. Reg. 10619.  This waiver notice follows the Notice of Proposed Waiver published by FHWA on August 31, 2022.  See 87 Fed. Reg. 53539.  In response to a robust response from industry, the final waiver is narrower and more streamlined than the proposed waiver, bringing the number of phases from four to two, and simplifying the definition of an EV charger.  The waiver applies starting March 23, 2023.…

Continue Reading FHWA Buy America Waiver for Electric Vehicle Chargers

Four federal agencies—the Environmental Protection Agency, the Department of Transportation, the Department of Energy, and the Department of Housing and Urban Development—have released a Blueprint for Transportation Decarbonization, an ambitious plan that outlines the principles the federal government will continue to use to pursue its stated goal of economy-wide net zero emissions by 2050. This “whole of government” mobilization will profoundly affect many investment decisions, collaborations, regulatory actions and policy disputes with material impacts across many business sectors.…

Continue Reading Biden Administration Releases Comprehensive Transportation Decarbonization Plan

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law, directing a record $370 billion toward clean energy investments.

Yesterday, the White House released a 182-page guidebook to the IRA entitled Building a Clean Economy.  John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, explains in…

Today, the IRS released Revenue Procedure 2022-42 to address the reporting requirements for vehicle manufacturers and sellers.  These reporting requirements are prerequisites for purchasers’ eligibility for clean vehicle tax credits under Sections 25E, 30D, and 45W.  Section 30D(d)(3) requires that a manufacturer enter into a written agreement to become a qualified manufacturer, which requires periodic written reports to the IRS.  Similarly, Section 30D(1)(H) requires that the person who sells a vehicle furnish a report to purchasers and the IRS.…

Continue Reading IRS Releases Reporting Requirements to Determine Eligibility for Clean Vehicle Tax Credits

On October 5, 2022, the Treasury Department and the IRS issued notices requesting comments on different aspects of the energy tax benefits in the Inflation Reduction Act (“IRA”). All comments are due by Friday, November 4, either electronically on www.regulations.gov or alternatively by mail to the IRS. Written comments submitted after that date will be considered as long as such consideration will not delay the issuance of guidance.…

Continue Reading IRS issues notices requesting comments on IRA clean energy tax credits

On October 5, 2022, the U.S. Environmental Protection Agency (“EPA”) announced its plan to streamline the typical review process for Mixed Metal Oxides (“MMOs”), including certain cathode active materials, which are key components in electric vehicles’ lithium-ion batteries, as well as clean energy generation and storage technology, including wind turbines and solar cells.  MMOs can also be used in semiconductors. 

As we have written about previously, increasing the domestic supply of EVs and semiconductors, and expanding the country’s clean energy capacity are among the core policy objectives of the Biden Administration.…

Continue Reading EPA to Streamline the Review Process for Certain EV and Clean Energy Chemicals