Washington and Tokyo are preparing to make Japanese vehicles eligible for U.S. tax credits targeted at electrified vehicles that use critical minerals from the United States or countries that it has free trade agreements with, sources familiar with the talks said Tuesday.
Under the changes, the U.S. will relax the rules to allow EVs to contain key minerals provided by Japanese companies, such as parts makers, despite Tokyo not holding a free trade agreement with Washington.
Promoting EV uptake is a key U.S. government policy. As part of the Inflation Reduction Act passed in August last year, it offers tax credits of up to $7,500 on purchases of EVs that come off North American assembly lines and in which a certain amount of battery-critical minerals are sourced or processed domestically or from free trade agreement countries.