President Biden signed into law the Inflation Reduction Act of 2022 (IRA) on August 16, as we anticipated in our extensive summary. The IRA includes historic investment opportunities in home energy generation and manufacturing with the goal of reducing U.S. carbon emissions by approximately 40% by 2030.  An underrated aspect of the legislation has been its requirements that electric vehicles (EVs) use domestically produced battery components for the batteries used in their vehicles.
II. National content requirements for electric vehicles
For vehicles put into service after December 31, 2022 through 2032, the IRA extends and amends the new plug-in electric motor vehicle credit with a clean vehicle credit, worth up to $7,500 with two components $3,750:
1. Component 1 will be achieved when a certain percentage of the battery’s critical minerals are mined or processed in the United States or a country with a free trade agreement with the United States or are recycled in North America. The applicable percentage increases each year by 10% until 2027 when 80% of the battery’s critical minerals must meet these provisions.
2. Component 2 will be satisfied when a certain percentage of the battery is manufactured or assembled in North America, that’s to saystarting January 1, 2024, at least 50% of EV battery components must be produced/manufactured in North America, increasing by 10% each year until 2029, when 100% of battery content must comply with these provisions.
Vehicles meeting one requirement, but not both, will be limited to a $3,750 credit.
The IRA excludes from the definition of “new clean vehicle” any vehicle put into service after December 31, 2024 whose battery contains critical minerals mined, processed or recycled by a “foreign entity of concern” and any vehicle put into service after December 31, 2023 whose battery contains components manufactured or assembled by a “foreign entity of concern”. A foreign entity owned, controlled or subject to the jurisdiction or direction of the Chinese government, currently the world’s largest producer of battery components, is on the list of “foreign entities of concern”. 
Credits will be denied for vehicles with retail prices above certain thresholds and for taxpayers with a modified adjusted gross income (AGI) greater than $300,000 for married taxpayers filing jointly, $225,000 for head of household and $150,000 for single taxpayers. For purposes of this threshold, the Amended AGI is subject to certain adjustments and represents the lower of the Amended AGI for the in-service year or the prior year.
The IRA will provide a tax credit, equal to the lesser of $4,000 or 30% of the sale price, for the first transfer of clean vehicles purchased from a dealer on or before December 31, 2032 if the year of model of the vehicle is at least two years before the calendar year of the acquisition of the vehicle by the taxpayer. Similar to the New Vehicle Credit, taxpayers above certain income thresholds will not qualify and price thresholds exist. The credit will be limited to taxpayers whose modified AGI (with certain adjustments and taking into account the lower modified AGI between the relevant tax year and the preceding tax year) of $150,000 or less for married persons declaring jointly; $112,500 or less for a head of household; and $75,000 or less for a single taxpayer. The selling price cannot exceed $25,000.
III. Eligible EVs
Shortly after President Biden signed the IRA, the Department of Energy released the list of electric vehicles currently eligible for the Clean Vehicle Credit (see below).  We anticipate the future publication of similar lists for clean used and commercial vehicles, as described in IRA Sections 13402 and 13403. 
The IRA presents a generational opportunity for domestic producers of battery components to catch up with competing Asian manufacturers and producers. Current domestic component production is far outstripped by demand for electric vehicle batteries. Our team helps national component and battery manufacturers increase their capacity to close this gap by:
Seek available funding from the US government to support expansion;
Establishment of manufacturing capacity;
Navigate complex tax and other considerations; and
Support component companies’ efforts to negotiate strategic relationships and supply agreements with national OEMs.
 Summary: The Inflation Reduction Act 2022Democratic Senators (August 11, 2022).
 See 42 USC § 18741(a)(5)(C) (referring to entities “owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is a covered nation (such as defined in Title 10) 2533c(d)); 10 USC § 2533c(d)(2) (listing “covered nations”, including China).
 U.S. Department of Energy, “Alternative Fuels Data Center,” available at https://afdc.energy.gov/laws/inflation-reduction-act.