A worker holds a piece of black mass, a mix of lithium, nickel, cobalt, and graphite, at the Li-Cycle lithium-ion battery recycling facility in Kingston, Ontario, Canada, in 2021.
Photo:
Christinne Muschi/Bloomberg
The Schumer-Manchin tax bill’s rich electric-vehicle subsidies are a boon for auto makers, but they come with a hitch: It’s unlikely any electric vehicle on the market today would qualify for the $7,500 tax credit because of conditions in the bill on material manufacturing. This will be one policy where Democratic promises of permitting reform meet the road.
The bill removes the current cap of 200,000 electric vehicles per manufacturer that can receive the credits and imposes an income limit of $225,000 for individuals. It also establishes a price limit to qualify for vans, SUVs and pickups ($80,000) and sedans ($55,000). What a relief that taxpayers won’t be subsidizing electric Porsches for millionaires.
But the biggest change is that the credit going forward will be contingent on where its battery materials are made. To qualify for $3,750 of the credit, an increasing share of a vehicle’s battery minerals such as lithium and nickel must be extracted or processed in the U.S. or in a country with which the U.S. has a free-trade agreement, starting at 40% in 2023 and increasing to 80% in 2027.
The other half of the credit will only be available for vehicles in which a majority of its battery components are made in North America, starting at 50% in 2023 and growing to 100% by 2029. Yet about 80% to 90% of battery components now are made in China, which also refines 68% of the world’s nickel, 73% of cobalt, 93% of manganese and 100% of the graphite in EV batteries.
Most of the world’s critical minerals are also mined in countries such as Russia, China, Indonesia and the Democratic Republic of Congo with which the U.S. doesn’t have free-trade agreements. Mr. Manchin insisted on these content requirements to ensure the U.S. doesn’t become dependent on China for…
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