US Extends EV Tax Credits for Graphite Use Until 2026

TL/DR –

The US government has decided to extend tax credits for electric vehicles (EVs) containing Chinese graphite until the end of 2026, in response to a demand from EV manufacturers. This comes as part of the Inflation Reduction Act, which offers up to $7,500 in tax credits to EVs that meet certain requirements and are assembled in North America. The decision has been welcomed by South Korea, which had expressed concerns about finding an alternative supply chain for graphite within the required timeframe.

US Extends Tax Credits for EVs with Chinese Graphite, Easing Industry Worries

On Friday, the US government extended the tax credits for electric vehicles (EVs) containing Chinese graphite till 2026, in response to demands from EV manufacturers. This move temporarily exempted graphite from the constraints on the utilization of minerals from “foreign entities of concern,” which include China, Russia, North Korea, and Iran.

The Inflation Reduction Act (IRA) provides up to US$7,500 in tax credits to North American-assembled EV buyers who meet sourcing requirements. Automobile manufacturers without these tax benefits may struggle to compete against companies that benefit from these credits.

This move is perceived as an attempt by the US to shift EV supply chains away from China due to growing Sino-US competition. The South Korean EV industry, which is heavily reliant on China’s supply chains, was expected to be impacted by these stringent rules.

South Korea’s Industry Minister Ahn Duk-geun welcomed the decision, stating that the ministry’s efforts, including addressing the graphite issue, have proven successful. South Korea had previously voiced concerns about the difficulty of finding alternative graphite supply chains within the IRA’s timeframe.

“Since the IRA’s enactment in August 2022, the government has been actively communicating with the US to maximize benefits for South Korean companies,” the ministry confirmed in its press release.

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