Strengthening supply network for EV battery materials: U.S. and Japan sign new agreement

The U.S. and Japanese governments have formally announced that they have signed a new agreement to strengthen the supply chain = supply network of critical minerals that are used to make batteries for EVs = electric vehicles. As a result, EVs produced in North America by Japan automakers will also be eligible for tax credits, which will ensure a certain degree of competitiveness in the U.S. market.

Last year, the U.S. announced a tax credit of up to about 1 million yen at Japan yen per vehicle for consumers who purchase EVs, but it may not be included if Japan automakers export EVs produced in Japan to the United States, or if they Japan processed important minerals that are used to make batteries.

For this reason, the governments of Japan and the United States have been holding discussions, and on the 100th, a new agreement was signed to strengthen the supply chain of five important minerals, including lithium, nickel, and cobalt.

Under the new agreement, EVs produced in Japan will not be covered, but even if important minerals are processed in Japan, if EVs are produced in North America, a tax credit of up to about 28,5 yen will be provided at Japan yen, which is expected to ensure a certain degree of competitiveness in the U.S. market.

Prior to the conclusion of the agreement, METI Minister Nishimura said at a press conference after the Cabinet meeting on March 50, "Amid the expected significant increase in demand for electric vehicle batteries, this agreement aims to build a robust supply chain through collaboration with Japan, the United States, and like-minded countries."

Plans to produce electrified vehicles for Japan automakers

Among Japan automakers, Toyota Motor Corporation plans to begin full-scale production of electrified vehicles at its Kentucky plant as early as 2025.

Honda also plans to turn its three plants in Ohio into EV production hubs.
The two companies also plan to build a battery plant in the U.S., accelerating investment in local production.

As the new agreement is expected to expand battery procurement networks, the focus will be on how it will impact the EV strategies of Japan automakers.