Critical Minerals and Energy Intelligence

Is IRA a gamechanger for the U.S. Battery Sector

The Inflation Reduction Act (IRA) generated a lot of headlines were all about climate goals, clean energy tax credits, and big-ticket federal spending. But what does it actually mean for the U.S. battery sector and thus for battery metal demand?

The $7,500 EV Tax Credit Got a Makeover: Under the IRA, the $7,500 incentive is now tied to where the battery components and minerals come from. Specifically, they need to be sourced or processed in North America or from free-trade partners.

New Rules, New Deadlines: Starting in 2023 and phasing in through 2029, the EV credit comes with strings: at least 40% of critical minerals (like lithium, nickel, and cobalt) must come from approved sources, rising to 80% by 2027. Battery components must meet a separate threshold, too.

Domestic Content Bonus = More Manufacturing Incentives: The law offers bonus credits for manufacturers who use U.S.-made battery cells and modules.

Production Tax Credit for Battery Makers: U.S. manufacturers of battery cells, modules, and even electrode active materials now qualify for a production tax credit.

The Mineral Processing Push: U.S. companies can now access funding and tax credits for refining lithium, nickel, and other critical minerals at home.

Battery Recycling Is on the Radar: The IRA allows recycled materials to count toward the “domestic content” thresholds for EV tax credits. Don’t hold your breath on recycling make a big difference though.

Billions for Loan Guarantees and Grants: The Department of Energy got a fresh $40 billion boost for loan programs, much of which is going toward battery supply chain projects—mining, refining, manufacturing.

Foreign Entity of Concern Clause: Batteries with components or minerals from “foreign entities of concern” (read: China) will eventually be disqualified from earning the EV tax credit.

I wouldn’t say it’s a gamechanger but it is progress.

Anthony Milewski

Chairman, Nickel 28 Capital

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