German automotive suppliers into US OEM Tier 1.
The corridor view. PPAP, APQP, IATF 16949, and the customer-specific requirements that govern Detroit Three OEM access.
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The federal tax credit of up to USD 7,500 for new qualified clean vehicles purchased by US buyers under the Inflation Reduction Act of 2022, conditioned on critical-mineral and battery-component sourcing requirements.
Internal Revenue Code Section 30D, as amended by the Inflation Reduction Act of 2022 (IRA), provides a federal income-tax credit of up to USD 7,500 for new qualified clean vehicles purchased by US taxpayers. The credit is structured in two equally weighted components of USD 3,750 each, both of which must be satisfied for a vehicle to qualify for the full USD 7,500. Vehicles meeting only one component qualify for USD 3,750. The credit is implemented through Treasury Regulations issued by the Internal Revenue Service and the Department of the Treasury.
The first component is the critical minerals requirement. An applicable percentage of the value of critical minerals contained in the battery must be extracted or processed in the United States or in a country with which the United States has a free-trade agreement, or recycled in North America. The applicable percentage rises over time, set at 40% in 2024, 50% in 2025, 60% in 2026, 70% in 2027, and 80% from 2028 onward. The second component is the battery components requirement. An applicable percentage of the value of components contained in the battery must be manufactured or assembled in North America, set at 60% in 2024, rising in steps to 100% from 2029 onward.
Foreign Entity of Concern (FEOC) restrictions apply on top of both component requirements. From 2024, vehicles containing battery components manufactured or assembled by a FEOC are ineligible for the credit. From 2025, vehicles containing applicable critical minerals extracted, processed, or recycled by a FEOC are ineligible. The FEOC definition references entities owned by, controlled by, or subject to the jurisdiction of the governments of designated countries, with detailed criteria set out in Treasury and Department of Energy guidance. The credit is also subject to vehicle MSRP caps, taxpayer income caps, and final-assembly-in-North-America requirements.
For European battery, cathode, anode, and electrolyte suppliers and for European OEMs operating EV programmes for the US market, IRA Section 30D directly shapes US footprint decisions, joint-venture structures, and supply contracts. The corridor mechanics for automotive suppliers are detailed in the German automotive suppliers into US OEM Tier 1 pillar, and the energy-transition view is in the cross-border energy transition US commercialization pillar.
Section 30D operates alongside Sections 45X (Advanced Manufacturing Production Credit) and 48C (Qualifying Advanced Energy Project Credit), which together form the IRA's industrial-policy framework for electric vehicle and clean-energy supply chains.
The corridor view. PPAP, APQP, IATF 16949, and the customer-specific requirements that govern Detroit Three OEM access.
Read the pillar →The IRA-shaped corridor for European clean-energy and EV supply-chain operators entering the US.
Read the pillar →The rules-of-origin requirement for vehicles and auto parts under the United States-Mexico-Canada Agreement.
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