Posted on 03 Apr 2023
The EU and US officials are working on the legal frameworks of their intended EV battery critical raw materials agreement, which will be slightly different from the US-Japan deal announced recently.
“That’s what has been holding up things, but we are quite optimistic that we can reach an agreement about the same sort of substantial scope as the Japanese,” European Commission’s vice president Margrethe Vestager told reports in Washington.
The EU official attended the third meeting of the EU-US Joint Technology Competition Policy Dialogue started on December 2021. She met with the US Federal Trade Commission chair Lina Khan and the assistant attorney general for antitrust of the US Department of Justice, Jonathan Kanter in Washington on 30 March.
The discussions focused on the digital sector and how potential mergers of certain players could lead to competition concerns. Yet, Vestager’s optimism that a battery minerals trade can be inked soon reflects the close cooperation between the allies.
EC’s president Ursula von der Leyen announced the start of negotiations on a critical materials deal in mid-March, after meeting US President Joe Biden in Washington. She said they agreed to work to give the EU extracted/processed raw materials the same treatment “as if they were sourced in the American market.” That would give manufacturers access to IRA subsidies.
The US Department of the Treasury published on Friday long-awaited details on incentives eligibility and criteria. To access a $7,500 tax credit, EVs must meet sourcing requirements for both the critical minerals and battery components contained in the vehicle. EVs that meet one of the two requirements are eligible for a $3,500 credit instead.
This year, at least 40% of the critical minerals used in the battery of the vehicle must be extracted or processed in the US; a free trade agreement partner to the US; or be recycled in North America. This content rate will gradually increase reaching 80% in 2027.
In terms of battery component requirement, at least 50% must be manufactured or assembled in North America to be eligible for a $3,750 credit. The requirement target reaches 100% in 2029.
Once a trade deal is finalised with the EU, battery raw materials from the bloc will also be eligible for the incentives.
Source:Kallanish
