According to the Wall Street Journal, the Joe Biden administration is due to draw up guidelines on how to reduce inflation, including tax credits for electric vehicles included in IRAs, by the end of the year.



Accordingly, it is noteworthy whether the Korean side's position on the issue of exclusion from the tax credit for electric vehicles in Korea will be reflected.



The law extends the tax credit of up to $7,500 per vehicle, or about 10.67 million won, for electric vehicles until 2032, and puts some requirements in its place.



First of all, only electric vehicles that are finally assembled in North America will be eligible.



In addition, at least 40% of the value of the core minerals used in electric vehicle batteries must be mined or processed in the United States or other countries that have free trade agreements with the United States, or recycled in North America.



This percentage will increase to 80% in phases by 2028.



In addition, at least 50% of the value of key components required to manufacture batteries, such as cathode materials and separators, must be manufactured or assembled in North America.



This percentage will also rise to 100% in phases by 2028.



If this law goes into effect next year, Korean companies such as Hyundai Motor Company and Kia Motors that produce all electric vehicles in Korea will be excluded from the beneficiaries.



Accordingly, the Korean government has forwarded these concerns to the US administration.



Separately, the U.S. and other foreign automakers are also in a position to ease this, saying it is difficult to meet the eligibility requirements for tax credit.



The Automobile Innovation Alliance, an industry group that includes automakers, estimated that 70% of electric vehicle models that had previously received tax credits would not benefit from this rule.



This is because the industry has relied on foreign countries such as China for the processing of batteries and battery material minerals.



The Auto Innovation Coalition has urged the Treasury to streamline its guidelines, saying it will be years before the industry can fully benefit from the tax credit.



The industry specifically requires disclosure of the calculation method used to determine whether key mineral requirements have been met.



Minerals such as lithium and cobalt have different values ​​when they are mined and processed, so whether or not they meet the 40% standard may vary depending on the calculation method.



The industry also expects component requirements to be judged based on battery packs and not battery cells.



A battery pack is made by bundling several battery modules, which are bundles of battery cells.



American companies have only recently started building battery cell manufacturing plants in their country.



The industry also requested specific guidelines on the exclusion of benefits if batteries or major minerals are procured from 'countries of concern'.



For example, it is questionable whether a company's headquarters is located outside of China, but if a subsidiary of the company conducts electric vehicle-related business in China, it would violate this rule.



An official from the Ministry of Finance said that they are working with related ministries such as the Ministry of Energy and the Environmental Protection Agency, and are working on how to define a free trade agreement in relation to taxation issues.