(a) Critical minerals requirement—(1) In general. The critical minerals requirement described in section 30D(e)(1)(A) of the Internal Revenue Code (Code), with respect to a clean vehicle battery, is met if the qualifying critical mineral content of such battery is equal to or greater than the applicable critical minerals percentage (as defined in paragraph (a)(2) of this section), as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary of the Treasury or her delegate (Secretary).

(2) Applicable critical minerals percentage—(i) In general. For purposes of paragraph (a)(1) of this section, the applicable critical minerals percentage, which is based on the year in which a vehicle is placed in service by the taxpayer, is set forth in paragraphs (a)(2)(ii) through (vi) of this section. See section 30D(e)(1)(B).

(ii) Vehicles placed in service between April 18, 2023, and December 31, 2023. In the case of a vehicle placed in service after April 17, 2023, and before January 1, 2024, the applicable critical minerals percentage is 40 percent.

(iii) Vehicles placed in service during calendar year 2024. In the case of a vehicle placed in service during calendar year 2024, the applicable critical minerals percentage is 50 percent.

(iv) Vehicles placed in service during calendar year 2025. In the case of a vehicle placed in service during calendar year 2025, the applicable critical minerals percentage is 60 percent.

(v) Vehicles placed in service during calendar year 2026. In the case of a vehicle placed in service during calendar year 2026, the applicable critical minerals percentage is 70 percent.

(vi) Vehicles placed in service during calendar year 2027 and later. In the case of a vehicle placed in service after December 31, 2026, the applicable critical minerals percentage is 80 percent.

(3) Determining qualifying critical mineral content—(i) In general. Qualifying critical mineral content with respect to a clean vehicle battery is calculated as the percentage that results from dividing:

(A) The total traced qualifying value, by

(B) The total value of critical minerals.

(ii) Separate determinations required for each procurement chain. The traced qualifying value of an applicable critical mineral, including the percentage or percentages necessary to determine the traced qualifying value, must be determined separately for each procurement chain.

(iii) Time for determining value. A qualified manufacturer must select a date for determining the values described in paragraphs (a)(3)(i)(A) and (B) of this section. Such date must be after the final processing or recycling step for the applicable critical minerals relevant to the certification described in section 30D(e)(1)(A).

(iv) Application of qualifying critical mineral content to vehicles. A qualified manufacturer may determine qualifying critical mineral content based on the value of the applicable critical minerals actually contained in the clean vehicle battery of a specific vehicle. Alternatively, for purposes of calculating the qualifying critical mineral content for clean vehicle batteries in a group of vehicles, a qualified manufacturer may average the qualifying critical mineral content under this paragraph (a)(3)(iv) over a period of time (for example, a year, a calendar quarter, or a month) with respect to vehicles from the same model line, plant, class, or some combination thereof, with final assembly (as defined in section 30D(d)(5) of the Code and § 1.30D-2(b)(23)) within North America.

(4) Temporary safe harbor for determining qualifying critical mineral content for vehicles for which a qualified manufacturer submits a periodic written report on or after May 6, 2024 and before January 1, 2027—(i) In general. For vehicles for which a qualified manufacturer submits a periodic written report on or after May 6, 2024 and before January 1, 2027, qualifying critical mineral content with respect to a clean vehicle battery may be calculated as the percentage that results from dividing:

(A) The total value of qualifying critical minerals, by

(B) The total value of critical minerals.

(ii) Separate determinations required for each procurement chain. The portion of an applicable critical mineral that is a qualifying critical mineral must be determined separately for each procurement chain.

(iii) Time for determining value. A qualified manufacturer must select a date for determining the values described in paragraphs (a)(4)(i)(A) and (B) of this section. Such date must be after the final processing or recycling step for the applicable critical minerals relevant to the certification described in section 30D(e)(1)(A).

(iv) Application of qualifying critical mineral content to vehicles. A qualified manufacturer may determine qualifying critical mineral content based on the value of the applicable critical minerals actually contained in the clean vehicle battery of a specific vehicle. Alternatively, for purposes of calculating the qualifying critical mineral content for clean vehicle batteries in a group of vehicles, a qualified manufacturer may average the qualifying critical mineral content calculation over a period of time (for example, a year, quarter, or month) with respect to vehicles from the same model line, plant, class, or some combination of thereof, with final assembly (as defined in section 30D(d)(5) of the Code and § 1.30D-2(b)(23)) within North America.

(v) Consistent determination required for all procurement chains. A qualified manufacturer that makes a determination under this paragraph (a)(4) must use the rules of this paragraph for all procurement chains of the clean vehicle battery. If a qualified manufacturer averages qualifying critical mineral content as described in paragraph (a)(4)(iv) of this section, the qualified manufacturer must use the rules of such paragraph for all procurement chains for all clean vehicle batteries in the group of vehicles. Therefore, the qualified manufacturer may not use the rules of paragraph (a)(3) for some procurement chains and the rules of paragraph (a)(4) for other procurement chains for the same clean vehicle battery or clean vehicle batteries in the group of vehicles, as applicable.

(5) Rule for determining qualifying critical mineral content for vehicles for which a qualified manufacturer submitted a periodic written report before May 6, 2024. For vehicles for which a qualified manufacturer submitted a periodic written report before May 6, 2024, qualifying critical mineral content with respect to a clean vehicle battery must be calculated using the method described in paragraph (a)(4) of this section.

(b) Battery components requirement—(1) In general. The battery components requirement described in section 30D(e)(2)(A), with respect to a clean vehicle battery, is met if the qualifying battery component content of such battery is equal to or greater than the applicable battery components percentage (as defined in paragraph (b)(2) of this section), as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary.

(2) Applicable battery components percentage—(i) In general. For purposes of paragraph (b)(1) of this section, section 30D(e)(2)(B) provides the applicable battery components percentage, which is based on the year in which a vehicle is placed in service by the taxpayer as set forth in paragraphs (b)(2)(ii) through (vii) of this section.

(ii) Vehicles placed in service between April 18, 2023, and December 31, 2023. In the case of a vehicle placed in service after April 17, 2023, and before January 1, 2024, the applicable battery components percentage is 50 percent.

(iii) Vehicles placed in service during calendar year 2024 or 2025. In the case of a vehicle placed in service during calendar year 2024 or 2025, the applicable battery components percentage is 60 percent.

(iv) Vehicles placed in service during calendar year 2026. In the case of a vehicle placed in service during calendar year 2026, the applicable battery components percentage is 70 percent.

(v) Vehicles placed in service during calendar year 2027. In the case of a vehicle placed in service during calendar year 2027, the applicable battery components percentage is 80 percent.

(vi) Vehicles placed in service during calendar year 2028. In the case of a vehicle placed in service during calendar year 2028, the applicable battery components percentage is 90 percent.

(vii) Vehicles placed in service in calendar year 2029 and later. In the case of a vehicle placed in service after December 31, 2028, the applicable battery components percentage is 100 percent.

(3) Determining qualifying battery component content—(i) In general. Qualifying battery component content with respect to a clean vehicle battery of the vehicle is calculated as the percentage that results from dividing—

(A) The total incremental value of North American battery components, by

(B) The total incremental value of battery components.

(ii) Time for determining value. A qualified manufacturer must select a date for determining the incremental values described in paragraphs (b)(3)(i)(A) and (B) of this section. Such date must be after the last manufacturing or assembly step for the battery components relevant to the certification described in section 30D(e)(2)(A).

(iii) Application of qualifying battery component content to vehicles. A qualified manufacturer may determine qualifying battery component content based on the incremental values of the battery components actually contained in the clean vehicle battery of a specific vehicle. Alternatively, for purposes of calculating the qualifying battery component content for clean vehicle batteries in a group of vehicles, a qualified manufacturer may average the qualifying battery component content calculation over a period of time (for example, a year, quarter, or month) with respect to vehicles from the same model line, plant, class, or some combination of thereof, with final assembly (as defined in section 30D(d)(5) of the Code and § 1.30D-2(b)(23)) within North America.

(iv) End point for determination. For a clean vehicle battery that contains a battery module or modules containing battery cells, the calculation under this paragraph (b) takes into account the value of the module and battery components contained in the module. In the case of a clean vehicle battery that contains battery cells but no battery modules, the calculation under this paragraph (b) takes into account the value of the battery cells and battery components contained in the battery cells.

(c) Definitions—(1) Certain terms relevant to the critical minerals requirement. The following definitions apply for purposes of the rules of section 30D(e)(1) and paragraph (a) of this section:

(i) Procurement chain. Procurement chain means a common sequence of extraction, processing, or recycling activities that occur in a common set of locations with respect to an applicable critical mineral, concluding in the production of constituent materials. Sources of a single applicable critical mineral may have multiple procurement chains if, for example, one source of the applicable critical mineral undergoes the same extraction, processing, or recycling process in different locations.

(ii) Qualifying critical mineral—(A) In general. Qualifying critical mineral means an applicable critical mineral that is extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, or that is recycled in North America.

(B) Extracted or processed in the United States or in any country with which the United States has a free trade agreement in effect. An applicable critical mineral is extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, if:

(1) Fifty percent or more of the value added to the applicable critical mineral by extraction is derived from extraction that occurred in the United States or in any country with which the United States has a free trade agreement in effect; or

(2) Fifty percent or more of the value added to the applicable critical mineral by processing is derived from processing that occurred in the United States or in any country with which the United States has a free trade agreement in effect.

(C) Recycled in North America. An applicable critical mineral is recycled in North America if 50 percent or more of the value added to the applicable critical mineral by recycling is derived from recycling that occurred in North America.

(iii) Qualifying critical mineral content. Qualifying critical mineral content means the percentage of the value of the applicable critical minerals contained in a clean vehicle battery that is extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, or that is recycled in North America.

(iv) Total traced qualifying value. Total traced qualifying value means the sum of the traced qualifying values of all applicable critical minerals contained in a clean vehicle battery.

(v) Total value of critical minerals. Total value of critical minerals means the sum of the values of all applicable critical minerals contained in a clean vehicle battery.

(vi) Total value of qualifying critical minerals. Total value of qualifying critical minerals means the sum of the values of all the qualifying critical minerals contained in a clean vehicle battery.

(vii) Traced qualifying value—(A) Extracted or processed in the United States or in any country with which the United States has a free trade agreement in effect. Traced qualifying value means, with respect to an applicable critical mineral that is extracted and processed into a constituent material, the value of the applicable critical mineral multiplied by the greater of:

(1) The value added to the applicable critical mineral by extraction that occurred in the United States or in any country with which the United States has a free trade agreement in effect, divided by the total value added by from extraction of the applicable critical mineral; or

(2) The value added to the applicable critical mineral by processing that occurred in the United States or in any country with which the United States has a free trade agreement in effect, divided by the total value added by processing of the applicable critical mineral.

(B) Recycled in North America. Traced qualifying value means, with respect to an applicable critical mineral that is recycled into a constituent material, the value of the applicable critical mineral multiplied by the percentage obtained by dividing the value added to the applicable critical mineral by recycling that occurred in North America by the total value added by recycling of the applicable critical mineral.

(viii) Value added. Value added, with respect to recycling, extraction, or processing of an applicable critical mineral, means the increase in the value of the applicable critical mineral attributable to the relevant activity. In the case of multiple applicable critical mineral procurement chains that are part of the same processing or recycling activity, value added should be allocated to each procurement chain based on relative mass.

(2) Certain terms relevant to the battery components requirement. The following definitions apply for purposes of the rules of section 30D(e)(2) and paragraph (b) of this section:

(i) Incremental value. Incremental value, with respect to a battery component, means the value determined by subtracting from the value of that battery component the value of the manufactured or assembled battery components, if any, that are contained in that battery component.

(ii) North American battery component. North American battery component means a battery component substantially all of the manufacturing or assembly of which occurs in North America, without regard to the location of the manufacturing or assembly activities of any components that make up the particular battery component.

(iii) Qualifying battery component content. Qualifying battery component content means the percentage of the value of the battery components contained in a clean vehicle battery that were manufactured or assembled in North America.

(iv) Total incremental value of battery components. Total incremental value of battery components means the sum of the incremental values of each battery component contained in a clean vehicle battery.

(v) Total incremental value of North American battery components. Total incremental value of North American battery components means the sum of the incremental values of each North American battery component contained in a clean vehicle battery.

(d) Upfront review of critical minerals and battery components requirements. For new clean vehicles anticipated to be placed in service after December 31, 2024, the qualified manufacturer must provide attestations, certifications, and documentation demonstrating compliance with the requirements of section 30D(e), at the time and in the manner provided in the Internal Revenue Bulletin (see § 601.601 of this chapter). The IRS, with analytical assistance from the Department of Energy, will review the attestations, certifications, and documentation.

(e) New qualified fuel cell motor vehicles. The requirements of section 30D(e) and this section are deemed to be satisfied with respect to new qualified fuel cell motor vehicles. The amount of the credit with respect to such vehicles, under section 30D(b), is $7,500.

(f) Examples. The following examples illustrate the rules of this section.

(1) Example 1: Critical minerals requirement—(i) Facts. In 2028, Company A uses a clean vehicle battery that contains three applicable critical minerals, which are used for the clean vehicle batteries of the same group of vehicles for the purposes of averaging qualifying critical mineral content under paragraph (a)(3)(iv) of this section.

(A) Applicable critical mineral 1 (ACM-1) has a value of $100. ACM-1 has one procurement chain; in this procurement chain, extraction accounts for 20% ($20) of the total value added of ACM-1 and processing accounts for 80% ($80) of the total value added of ACM-1. Of the value added by extraction, 100% ($20) is in the United States or in a country with which the United States has a free trade agreement in effect. Of the value added by processing, 100% ($80) is in the United States or in a country with which the United States has a free trade agreement in effect.

(B) Applicable critical mineral 2 (ACM-2) has a value of $200. ACM-2 has two procurement chains. The value of ACM-2 is $100 per procurement chain. In the first procurement chain for ACM-2, extraction accounts for 50% ($50) of the value added, while processing accounts for 50% ($50). Of the value added by extraction, 50% ($25) is in United States or in a country with which the United States has a free trade agreement in effect. Of the value added by processing, 25% ($12.50) is in the United States or in a country with which the United States has a free trade agreement in effect. In the second procurement chain for ACM-2, extraction accounts for 50% ($50) of the value added, and processing accounts for 50% ($50) of the value added. Of the value added by extraction, 75% ($37.50) is in the United States or in a country with which the United States has a free trade agreement in effect. Of the value added by processing, 100% ($50) is in the United States or in a country with which the United States has a free trade agreement in effect.

(C) Applicable critical mineral 3 (ACM-3) has a value of $100. ACM-3 has one procurement chain. Extraction accounts for 10% ($10) of the value added and processing accounts for 90% ($90) of the value added. Of the value added by extraction, 50% ($5) is in the United States or in a country with which the United States has a free trade agreement in effect. Of the value added by processing, 75% ($67.50) is in the United States or in a country with which the United States has a free trade agreement in effect.

(ii) Analysis—(A) First, Company A determines each procurement chain. ACM-1 has one procurement chain. ACM-2 has two procurement chains. ACM-3 has one procurement chain.

(B) Second, Company A determines, for each procurement chain, the traced qualifying value, and then determines the total traced qualifying value.

(1) With respect to ACM-1, Company A divides the value added by extraction that is in the United States or in any country with which the United States has a free trade agreement in effect by the total value added from extraction of the applicable critical mineral: $20/$20, which equals 100%. Company A divides the value added by processing that is in the United States or in any country with which the United States has a free trade agreement in effect by the total value added from processing of the applicable critical mineral: $80/$80, which equals 100%. Because the percentages for extraction and processing are equal, that percentage (100%) is used to determine traced qualifying value. Therefore, Company A multiplies 100% by the total value of the applicable critical mineral ($100) to obtain $100 as the traced qualifying value for the procurement chain of ACM-1.

(2) With respect to the first procurement chain of ACM-2, Company A divides the value added by extraction that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from extraction of the applicable critical mineral: $25/$50, which equals 50%. Company A divides the value added by processing that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from processing of the applicable critical mineral: $12.50/$50, which equals 25%. Of these percentages, the one for extraction is greater (50%). Therefore, Company A multiplies 50% by the total value of the applicable critical minerals ($100) to obtain $50 as the traced qualifying value for the first procurement chain of ACM-2.

(3) With respect to the second procurement chain of ACM-2, Company A divides the value added by extraction that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from extraction of the applicable critical mineral: $37.50/$50, which equals 75%. Company A divides the value added by processing that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from processing of the applicable critical mineral: $50/$50, which equals 100%. Of these percentages, the one for processing is greater (100%). Therefore, Company A multiplies 100% by the total value of the applicable critical mineral ($100) to obtain $100 as the traced qualifying value for the second procurement chain of ACM-2.

(4) With respect to ACM-3, Company A divides the value added by extraction that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from extraction of the applicable critical mineral: $5/$10, which equals 50%. Company A divides the value added by processing that is in the United States or a country with which the United States has a free trade agreement in effect by the total value added from processing of the applicable critical mineral: $67.50/$90, which equals 75%. Of these percentages, the one for processing is greater (75%). Company A therefore multiplies 75% by the total value of the applicable critical mineral ($100) to obtain $75 as the traced qualifying value for the procurement chain of ACM-3.

(5) The total traced qualifying value is the sum of the traced qualifying values of all applicable critical minerals contained in the clean vehicle battery of the vehicle, or $325 ($100 + $50 + $100 + $75).

(C) Third, Company A determines the qualifying critical mineral content by taking the total traced qualifying value ($325, determined in step 2) divided by the total value of the critical minerals in the battery ($400). The qualifying critical mineral content is therefore 81.25%. Company A uses this percentage to calculate the average qualifying critical mineral content for the clean vehicle batteries of a group of vehicles and compares that average percentage to the applicable critical minerals percentage of section 30D(e)(2) and § 1.30D-3(a)(2).

(2) Example 2: Critical minerals requirement temporary safe harbor—(i) Facts. The facts are the same as in paragraph (f)(1)(i) of this section (facts of Example 1). However, Company A is eligible to apply the temporary safe harbor of § 1.30D-3(a)(4) to determine its qualifying critical mineral content and chooses to do so. The applicable critical minerals are used for the clean vehicle batteries of the same group of vehicles for the purposes of averaging qualifying critical mineral content under paragraph (a)(4)(iv) of this section.

(ii) Analysis—(A) First, Company A determines each procurement chain, as in paragraph (f)(1) of this section (Example 1).

(B) Second, Company A determines whether ACM-1, ACM-2, and ACM-3 are qualifying critical minerals. ACM-1 is a qualifying critical mineral because, for both extraction and processing, 100% of the value added is derived from extraction and processing that occurs in the United States or in a country with which the United States has a free trade agreement in effect. With respect to its first procurement chain, ACM-2 is a qualifying critical mineral because 50% of the value added from extraction is derived from extraction that occurs in the United States or a country with which the United States has a free trade agreement in effect. With respect to its second procurement chain, ACM-2 is a qualifying critical mineral because 75% of the value added from extraction, and 100% of the value added from processing are derived from extraction and processing, respectively, that occur in the United States or in a country with which the United States has a free trade agreement in effect. ACM-3 is a qualifying critical mineral because 50% of the value added for extraction, and 75% of the value added for processing, are derived from extraction and processing, respectively, that occur in the United States or in a country with which the United States has a free trade agreement in effect. The total value of the qualifying critical minerals is the sum of the value of all of the qualifying critical minerals contained in the clean vehicle battery of the vehicle, or $400 ($100 + $100 + $100 + $100).

(C) Third, Company A determines qualifying critical mineral content by taking the total value of qualifying critical minerals ($400, determined in step 2) and dividing by the total value of critical minerals in the battery ($400). The qualifying critical mineral content of the battery is 100%. Company A uses this percentage to calculate average qualifying critical mineral content for the clean vehicle batteries of a group of vehicles and compares that average percentage to the applicable critical minerals percentage of section 30D(e)(2) and § 1.30D-3(a)(2).

(3) Example 3: Battery components requirement—(i) Facts. Company B uses a battery cell comprised of a cathode electrode, anode electrode, separator, and electrolyte. The cathode electrode has a value of $4,000 and is manufactured in North America. The anode electrode has a value of $1,000 and is manufactured outside of North America. The separator has a value of $1,000 and is manufactured in North America. The electrolyte has a value of $800 and is manufactured in North America. The battery cell has a value of $7,500 and is manufactured in North America. The battery components are used for the clean vehicle batteries of the same group of vehicles for the purposes of averaging qualifying critical mineral content under paragraph (b)(3)(iii) of this section.

(ii) Analysis—(A) First, Company B determines whether each battery component in a battery is a North American battery component. The cathode electrode, separator, and battery cell are North American battery components.

(B) Second, Company B determines the total incremental value of North American battery components. The incremental value of the battery cell ($700) is determined by subtracting from the value of the battery cell ($7,500) the total value of its battery components ($6,800). The incremental value of the cathode electrode is $4,000. The incremental value of the separator is $1,000. The incremental value of the electrolyte is $800. The total incremental value of North American battery components is $6,500 ($700 + $4,000 + $1,000 + $800).

(C) Third, Company B determines the total incremental value of battery components. The anode electrode is not a North American battery component because it is manufactured outside of North America. The incremental value of the anode electrode is $1,000. The total incremental value of battery components is $6,500 plus $1,000 or $7,500.

(D) Fourth, Company B determines the qualifying battery component content by taking the total incremental value of North American battery components ($6,500, determined in Step 2) divided by the total incremental value of battery components ($7,500, determined in Step 3). The qualifying battery component content is therefore 86.7%. Company B uses this percentage to calculate the average battery component content for the clean vehicle batteries of a group of vehicles and compares that average percentage to the applicable battery components percentage of section 30D(e)(2) and § 1.30D-3(b)(2).

(g) Severability. The provisions of this section are separate and severable from one another. If any provision of this section is stayed or determined to be invalid, it is the agencies' intention that the remaining provisions shall continue in effect.

(h) Applicability date—(1) In general. Except as provided in paragraph (h)(2) of this section, this section applies to new clean vehicles placed in service after April 17, 2023, in taxable years ending after April 17, 2023.

(2) Upfront review and traced qualifying value. Paragraphs (a)(3) and (4) (relating to traced qualifying value test) and (d) (relating to upfront review of critical minerals and battery components requirements) of this section apply to taxable years ending after May 6, 2024.

[T.D. 9995, 89 FR 37754, May 6, 2024]