EV Tax Credit Rule Narrows Eligibility Raises Concerns Over China’s Influence

The Biden administration’s final rule on electric vehicle tax credits, released Friday, narrows the pool of eligible vehicles in the coming years as it attempts to balance boosting EV adoption and curbing China’s dominance in the supply chain. The rule provides up to $7,500 for the purchase of a new EV.

Currently, around 40 vehicles could qualify for all or part of the credit. However, this number is expected to decrease in 2025 when the ban on minerals from “foreign entities of concern” primarily Chinese companies, takes effect, with an exemption for graphite. Eligibility will further tighten in 2027 when the graphite grace period expires.

The graphite exemption drew criticism from mining companies and Sen. Joe Manchin (D-WV), who argued it provided a loophole for Chinese companies to benefit from the incentives. Manchin called it “outrageous and illegal” and vowed to lead a Congressional Review Act resolution of disapproval.

Administration officials defended the rule, highlighting investments in domestic mineral production and battery manufacturing. They emphasized the graphite exemption has a clear end date and expressed optimism that investments in the sector will meet demand by 2027.