Ahn Deok-geun, the Minister of Trade, Industry and Energy, is responding to questions from lawmakers during a comprehensive audit of the Ministry of Trade, Industry and Energy held by the National Assembly’s Trade, Industry, Energy, SMEs and Startups Committee in Yeouido, Seoul, on the morning of the 24th. ⓒNewsis
According to reporter Lim Eun-seok from Dailyan, on the 24th (local time), the Ministry of Trade, Industry and Energy announced that the U.S. Department of Treasury had released the final guidance on the Inflation Reduction Act (IRA) Advanced Manufacturing Production Tax Credit (45X), which is set to be implemented on December 27, 2024.
The U.S. Treasury Department had issued provisional guidance in December last year to implement the IRA’s Advanced Manufacturing Production Tax Credit, and after a 60-day domestic and international opinion-gathering period and internal review, the final guidance was confirmed after 10 months.
The Advanced Manufacturing Production Tax Credit applies when products utilizing advanced manufacturing technology are produced and sold within the U.S. It applies to products whose production was completed and sold after December 31, 2022.
The tax credit provisions are applicable from 2023 to 2032, covering items such as battery components, solar and wind power components, and critical minerals.
The final guidance is based on the provisional guidance, but there are changes. Specifically, the requirements for battery companies to satisfy the module tax credit ($10 per kWh) have eased, likely expanding the scope of the tax credit.
Additionally, for battery materials (such as electrode active materials) and critical minerals, the final guidance specifies that as long as benefits do not overlap, direct and indirect material costs and raw material extraction costs are included in production costs, potentially benefiting Korean battery material companies.
Minister Ahn Deok-geun stated, “Following the commercial vehicle (including lease and rental vehicles) tax credit guidance on December 29, 2022, and the eco-friendly vehicle tax credit guidance on May 3, 2024, the final guidance on Advanced Manufacturing Production Tax Credit has been confirmed, adding another institutional device for the benefit of our industries under the IRA tax credits,” He credited this as “the result of our government’s efforts over the past two years to maximize the interests of our companies and ensure stable business activities through close communication with the industry and multiple consultations with the U.S. government.”
The Ministry of Trade, Industry and Energy plans to hold a meeting with the battery industry on the 25th to examine the impacts of this guidance on the industry and to prepare strategies in response to the global trade environment.