Foley & Lardner LLP Partner Lynn Parins is quoted in the Law360 article, “Auto Cos. Gain Little Clarity In EV Battery Sourcing Rule,” discussing the newly proposed rules and guidance interpreting stringent domestic sourcing requirements from the U.S. Department of the Treasury and Internal Revenue Service for retooled tax credits made available in last year’s Inflation Reduction Act (IRA).
One issue still being worked through by the administration is the sourcing of critical electric vehicle battery minerals like lithium, nickel, and cobalt, which are presently sourced outside the U.S. “It’s still early to fully take in the scope of the guidance, but my early sense is that Treasury went to some lengths to try to broaden the scope of the tax credit in its reading of the IRA,” Parins said. “The guidance indicates that eligibility for the minerals component of the tax credit could extend to countries with whom the U.S. has a free trade agreement, which can include minerals trade agreements under the guidance.”
“Again, it will take some time to trace all these ramifications through, but it seems as though it at least opens the door to potential eligibility for manufacturers outside the U.S,” Parins added.
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