TL/DR –
The U.S. Treasury Department and IRS have released the final rules on clean vehicle provisions of the Inflation Reduction Act (IRA), with the Department of Energy issuing guidance on battery manufacturing issues as per the Bipartisan Infrastructure Law (BIL). These measures are said to be lowering costs for consumers and creating a US manufacturing boom in batteries and clean vehicles, with over $173 billion in private sector investment announced. The rules provide definitions and regulations on taxpayer and vehicle eligibility for clean vehicle credits, with clarity on transferring these credits to registered dealers, benefiting consumers with immediate savings at the point of sale.
US Treasury and IRS Finalize Rules on Clean Vehicle Provisions
The U.S. Treasury Department and the Internal Revenue Service (IRS) have finalized rules on clean vehicle provisions under the Inflation Reduction Act (IRA). The U.S. Department of Energy also released guidance on battery manufacturing issues under the Bipartisan Infrastructure Law (BIL).
The rules are expected to reduce costs for consumers and catalyze a U.S. manufacturing boom in batteries and clean vehicles, leading to $173 billion in private sector investment in the clean vehicle and battery supply chain.
“The Inflation Reduction Act’s clean vehicle credits save consumers up to $7,500 on new vehicles and hundreds of dollars per year on gas, while creating jobs and strengthening our energy security,” said Treasury Secretary Janet L. Yellen. The new landscape is set to position the United States as a leader in green energy.
The rules detail taxpayer and vehicle eligibility for clean vehicle credits, address critical minerals and battery components requirements, and expatiate the Foreign Entity of Concern restriction added to the clean vehicle credit by the IRA. The DOE’s guidance further clarifies the definition of Foreign Entity of Concern for 30D clean vehicle credit and the battery manufacturing grant program.
Notably, the regulations allow transferring the 30D clean vehicle credit of up to $7,500 and 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This enables consumers to benefit from credits at the point of sale rather than upon filing their taxes – an approach that has proven popular, with over 100,000 credits transferred at sales points so far, resulting in an estimated $700 million in immediate consumer savings.
“Today’s actions provide clarity and certainty to a rapidly growing EV marketplace,” said John Podesta, Senior Advisor to the President for International Climate Policy. “We’re headed toward a future where many more Americans drive an EV or a plug-in hybrid that is affordable and made here in America.”
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