US officials expanded access to clean vehicle subsidies in proposed guidelines released Friday, allowing electric vehicles that use critical minerals collected and processed in Japan -- and potentially the EU -- to also benefit from incentives.
President Joe Biden's ambitious climate action plan, the Inflation Reduction Act (IRA), funnels some $370 billion into subsidies for America's energy transition, including tax cuts for US-made electric vehicles (EVs) and batteries.
Guidelines released Friday by the Treasury Department spell out requirements that EV batteries have to meet for vehicles to qualify for a full $7,500 consumer tax credit.
While the IRA stipulates that a percentage of critical minerals in the battery must be sourced from America or countries it has free-trade pacts with -- initially leaving Japan and the European Union in the cold -- Friday's announcement signals room for maneuver.
"This term could include newly negotiated critical minerals agreements," said the Treasury Department in a statement.
It added that 21 countries, Japan among them, are included.
The confirmation comes days after the United States and Japan unveiled a deal on critical minerals trade to reinforce supply chains in a sector dominated by China.
This opens doors for a similar pact with the EU, which could ease US tensions with the bloc.
European leaders have been concerned that EU-based energy and auto companies will be shut out or move to the United States, and both sides are currently in talks for a targeted critical minerals deal.