US IRA Advanced Manufacturing Production Tax Credit Final Guidance Released... "Battery, Solar, and Wind Power Companies Expected to Benefit"

The Ministry of Trade, Industry and Energy announced that the U.S. Department of the Treasury released the final guidance on the Inflation Reduction Act (IRA) Advanced Manufacturing Production Tax Credit (45X) on the 24th (local time). This is scheduled to take effect on December 27.

To implement the IRA Advanced Manufacturing Production Tax Credit, the U.S. Department of the Treasury issued provisional guidance last December, collected domestic and international feedback for 60 days, and after internal review, finalized the guidance after 10 months.

The Advanced Manufacturing Production Tax Credit provides tax credits when products utilizing advanced manufacturing technologies are produced and sold within the United States. It applies to products completed and sold after December 31, 2022. The tax credit provisions are applicable from last year through 2032, covering items such as battery components, solar and wind power generation parts, and critical minerals.

The final guidance is based on the provisional guidance. However, it is expected that the tax credit scope will expand as battery companies will find it somewhat easier to meet the module tax credit requirement ($10/kWh). Additionally, for battery materials (electrode active materials) and critical minerals, the final guidance announced this time includes direct and indirect material costs and raw material extraction costs in production costs, provided benefits are not duplicated, which is expected to benefit Korean battery material companies as well.

Andukgeun, Minister of Trade, Industry and Energy, stated, "Following the commercial electric vehicle (including lease and rental vehicles) tax credit guidance (December 29, 2022) and the eco-friendly vehicle tax credit guidance (May 3 this year), the final guidance on the Advanced Manufacturing Production Tax Credit has been confirmed, adding an institutional framework for our industry to benefit from the IRA tax credits." He evaluated this as "the result of close communication between our government and industry over the past two years to maximize the benefits for our companies and ensure stable business operations, along with multiple consultations with the U.S. government."

On the same day, the Ministry of Trade, Industry and Energy held a meeting with the battery industry to review the impact of this guidance on the industry and to discuss countermeasures in preparation for the global trade environment.