Ford: US Should Relax 'Foreign Entity' Regulations For Tax Breaks On EVs

Ford Motor Co said on Thursday that the US Treasury Department's definition of a "foreign business of concern" should be narrowed to ensure that more electric vehicles qualify for up to $7,500 in customer tax credits.

The $430 billion Inflation Reduction Act (IRA) legislation passed by Congress in August restructured EV tax credits and will, in the coming years, bar credits if any EV battery components were manufactured or assembled by a "foreign entity of concern" or if batteries contain critical minerals extracted, processed, or recycled by a foreign entity of concern.

The rules were designed to wean the US off the Chinese battery supply chain.

"While Ford appreciates and supports the overall goal of the law, which is to increase the localization of battery production and critical mineral mining and processing in the United States and with our trading partners and allies, an overly broad interpretation of this provision risks undermining that very same goal by making the clean vehicle credit largely unavailable," the automaker said in comments filed with Treasury and sent to the media.

Ford has asked the Biden administration to ensure that joint ventures in crucial mineral mining, processing, or recycling "would not automatically exclude automobiles." The corporation further stated that any US-incorporated company, regardless of its owners, should not be considered a foreign entity.

Ford further stated that as part of foreign entity reporting requirements, automakers demand a "de minimis criterion" to ensure that "unintended traces of key minerals do not preclude consumers from receiving a tax credit."

Ford announced in July that it would import lower-cost lithium ion batteries from Chinese battery manufacturer CATL for its North American electrified pickup trucks and SUVs.

According to the IRA, automakers must acquire 50% of essential materials used in batteries from North America or American allies by 2024, increasing to 80% by the end of 2026. Foreign entity limits commence in 2024 for vehicle battery components and in 2025 for battery minerals.

(source : reuters)