F - U.S. inks deal with Japan for critical minerals in EV batteries

2023-03-28 07:30:54 ET

Big investments in electric cars will require big purchases of critical minerals, with batteries making up anywhere from 25% to 50% of an EV's cost. That means it's even more crucial to secure supplies of lithium, cobalt, manganese, nickel and graphite, especially as the Biden administration pursues a goal of phasing out the internal combustion engine with the climate-focused Inflation Reduction Act . The measure provides a $7,500 tax credit for companies that source materials from countries with which the U.S. has a free trade agreement, but that limits providers like the EU and Japan (which isn't a good strategy when looking to shift energy supply chain dependency away from China).

A new deal announced in Washington is looking to change that. The agreement with Tokyo will not levy export duties on EV battery minerals, meeting the sourcing requirement for the new subsidy without going through lengthy negotiations on broader trade issues.

"Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship," U.S. Trade Representative Katherine Tai said in a statement. "This is a welcome moment as the United States continues to work with our allies and partners to strengthen supply chains for critical minerals, including through the Inflation Reduction Act."

The hope is for a similar trade agreement with the EU, with negotiations currently underway. Also see Lithium Miners News For The Month Of March 2023 by SA Investing Group author Trend Investing .

Related: Ford ( NYSE: F ), General Motors ( NYSE: GM ), Lordstown Motors ( RIDE ), Nikola ( NKLA ), Lucid Group ( LCID ), Rivian Automotive ( NASDAQ: RIVN ), Tesla ( NASDAQ: TSLA ).

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