Inflation Reduction Act Boosts EV Batter Sourcing and Production in North America


Joe Biden, president of the United States of America, signed the Inflation Reduction Act, which is an expansive legislation that encourages electric vehicle manufacturers to expand sourcing and production in North America.

The landmark climate and healthcare law contains around 7,500 dollars in tax credits for consumers who purchase electric vehicles, even though the financial incentive only applies when final assembly of the vehicles occurs in the region of North America.

The components used in the electric vehicle batteries must not be extracted, recycled, or processed by a foreign entity of concern, which also includes Russia and China. Joe Biden said the US automobile companies along with American labor are committing their treasure, and talent, with billions of dollars in investment to make electric vehicles, batteries, and electric charging stations all across the United States.

With an estimated 85 percent of rare earth metal processing taking place in China, it might be difficult for automobile companies to meet the needs for their vehicles to qualify for credits. The electric vehicle companies must source at least 50 percent of the battery components by value in the United States starting 2024.

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John Bozzella, president and CEO of the Alliance for Automotive Innovation, said while they work to unlock supplies of minerals, and increasing battery production at home, they cannot meet the demand for these materials on their own.


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