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On the Catalyst with Shayle Kann podcast this week:
Depending on which headlines you read, the Inflation Reduction Act will either hurt U.S. electric vehicle sales by replacing existing tax credits with new, more complicated incentives or spur the buildout of a North American battery supply chain and turbocharge EV sales. So which narrative is accurate?
In this episode, Shayle talks to Sam Jaffe, vice president of battery solutions at E Source, about the key provisions of the Inflation Reduction Act’s EV and battery tax credits. Sam explains how the new law will bolster the North American EV battery supply chain in the long run — but will also create winners and losers along the way.
There’s a $30 billion pot of money for various tax credits and limited time to make use of them. Which companies will get to it first? There are already some early movers making plays.
Sam explains the key provisions:
The EV components tax credit reduces the cost of EVs whose batteries contain materials assembled in the U.S. or its free-trade partner countries. This includes electrodes, electrolyte components and cells.
The critical and strategic minerals tax credit reduces the cost of EVs whose batteries contain minerals mined and processed in the U.S. or its free-trade partner countries. These minerals include lithium, cobalt and rare earth metals, among others.
The 45X advanced manufacturing production credit reduces the cost of making batteries in the U.S.
Certain credits ratchet up the percentage of materials required to qualify over several years. That means that once an EV model qualifies, it will have to maintain eligibility by sourcing increasingly larger shares of its components and minerals from approved countries.
Shayle and Sam also discuss which part of the battery industry will benefit more: the EV battery side or the stationary storage side. And Sam explains why he’s paying attention to the Treasury Department’s forthcoming guidance on the tax credits.
The New York Times: For Electric Vehicle Makers, Winners and Losers in Climate Bill
Canary Media: Private-sector reactions to the Inflation Reduction Act
Canary Media: 6 clean energy companies that are ramping up U.S. manufacturing
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