The final regulations of the U.S. Inflation Reduction Act (IRA) were announced. Batteries made using Chinese graphite and electric vehicles equipped with them can also receive subsidies under the IRA until 2026.
Batteries and electric vehicles using U.S. and Chinese graphite
According to the Ministry of Trade, Industry and Energy on the 6th, on the 3rd (local time) the U.S. Department of the Treasury and the Department of Energy announced the final guidance regarding tax credits for electric vehicles.
Looking at the main contents of the final guidance, graphite used in battery anode materials was classified as an impracticable-to-trace material. Graphite uses a mixture of natural graphite and artificial graphite, and because it is difficult to trace the origin and replace the supply chain in a short period of time, the application of Foreign Concerned Organizations (FEOC) was postponed for two years. However, battery and electric vehicle companies must submit a report to the U.S. government detailing their plans to comply with FEOC regulations by the end of 2026.
Previously, the U.S. government announced that in order to receive an IRA electric vehicle subsidy of up to $7,500, key battery minerals must not be procured from FEOC starting in 2025. Graphite is highly dependent on imports from China, which is regulated by FEOC. As of last year, Korea’s dependence on Chinese graphite imports was around 97%. Accordingly, the Korean government and the battery and automobile industries have proposed suspending the application of FEOC regulations for graphite or making an exception.
Meanwhile, in this announcement, a method for calculating eligible minerals that meet the battery core mineral requirements was also presented. Last year’s interim guidance defined minerals as eligible only when more than 50% of added value from mining or processing of core minerals is created in the United States or a country that has signed a U.S. FTA, and calculated the proportion. In the final guidance, it was decided to apply the actual added value proportion regardless of the 50% standard.
