U.S. Inflation Reduction Act (IRA) Detail Guidelines Announced, Biggest Beneficiary Bipolar Materials Company

The U.S. Treasury Department announced on the 31st local time that detailed guidelines on batteries from the U.S. Inflation Reduction Act (IRA) will be released and the regulations will take effect on April 18. The controversy over discrimination against Korean electric vehicles, which had been excluded from subsidies, largely reflected the position of Korean companies, allowing them to receive subsidies of up to $7,500 for batteries processed in Korea and assembled in the U.S.

U.S. Inflation Reduction Act (IRA) Electric Vehicle Tax Credit Detail Guidelines Key Content

Under detailed guidelines under the U.S. Inflation Reduction Act, which would only grant subsidies to electric vehicles that were finally assembled in the U.S. using U.S. components, Korean batteries could benefit from subsidies. The requirements for electric vehicle subsidies shall meet all (1) Critical Mineral Requirements (2) Battery Component Requirements. If 40 percent of key minerals are extracted, processed, or recycled from countries that have an FTA with the U.S., and battery parts are processed from countries that have an FTA with the U.S. to generate more than 50 percent added value, they can deduct up to 3,750 dollars per electric car.

Core minerals and battery parts

Core minerals include lithium, nickel, manganese, graphite, and cobalt. Battery parts were defined as cathode plate, anode plate, separator, electrolyte, battery cell, and module. Cathode active material (cathode material), aluminum foil, CNT conductive material, and anode active material (anode material), silicon additive (silicon anode material), CNT conductive material, copper foil, etc. used to make cathode plate are not included in battery parts. As a result, even if battery raw materials are imported from abroad, processed in Korea, and exported to the U.S. to finally complete the parts, they will be able to receive subsidies by satisfying both mineral and component standards. However, regarding the import of core minerals currently dependent on China, battery parts were included from 2024 and core minerals should not be sourced from foreign concern groups from 2025. However, regarding Korean electric vehicles, which were usually controversial last year, the U.S. position that subsidies can be received only for electric vehicles that were finally assembled in the U.S. remained the same.

U.S. Inflation Reduction Act (IRA) Beneficiaries - L&F, EcoProBM, POSCO Chemical

The announcement of detailed regulations on the U.S. Inflation Reduction Act (IRA) is expected to benefit from the fact that anode and cathode materials companies can supply them to countries that have signed FTAs with the U.S. without building factories in the U.S. In the case of L&F, it is expected to match the stock price of other cathode materials (EcoproBM, POSCO Chemical) as it was the most suppressed stock among major companies of anode materials due to the IRA (enter the U.S. in August 2022.