The US Treasury Department has announced that it will delay the release of its proposed guidance on the required sourcing of electric vehicle batteries until March 2021.

 The $430 billion Inflation Reduction Act (IRA) imposes restrictions on EV tax credits based on the sourcing of battery components and critical minerals.

The IRA aims to limit EV tax credits to vehicles assembled in North America and reduce the US's reliance on batteries from China, which currently make up 70% of global supply.

The Treasury Department has until the end of the year to clarify the battery sourcing rules.

 Some requirements for EV tax credits, including caps on income and retail prices, will take effect on January 1, 2021.

The Treasury guidance, which will be released in March, will require that at least 40% of the value of the critical minerals in the battery be extracted or processed in the US or a country with a US free-trade agreement, or recycled in North America, in order to receive $3,750 in tax credits.

The remaining $3,750 in credits will be given if at least 50% of battery components are manufactured or assembled in North America. Both percentages will increase annually.

The Treasury Department has said that it will "release information on the anticipated direction" of the rules by December 31.

 It is unclear whether the Treasury Department will address other questions, including whether automakers will be allowed to take advantage of commercial clean vehicle credits by leasing vehicles to consumers, by the end of the year.

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