The BATT Coalition proposes tax reforms to spur greater domestic independence

The Battery Advocacy for Technology Transformation (BATT) Coalition has submitted a letter to the leadership of the House Committee on Ways and Means recommending additional tax incentives to compete with China and to close a series of loopholes that are undermining efforts to build lasting domestic capacity.

The BATT Coalition, launched in August 2024, serves as the collective voice of foremost innovators across the lithium-ion battery supply chain — from upstream producers of raw materials to makers of discrete battery components and battery recycling.

“Current tax policies fail to provide adequate incentives and protections necessary to spur a thriving domestic battery materials market,” Samm Gillard, BATT Coalition executive director, and Drew Ronneberg, BATT Coalition policy director, wrote in public comments submitted to the Ways and Means Supply Chain Tax Team on Oct. 15. “These policies disproportionately incentivize cell and pack producers, and do not protect domestic producers from Chinese companies and other Foreign Entities of Concern (FEOCs) that enjoy state subsidies and engage in unfair trade practices.”

The BATT Coalition is calling for changes to the Advanced Manufacturing Production Credit (45X) and the Qualified Commercial Clean Vehicle Credit (45W) to prohibit U.S. companies from sourcing cells or battery materials from China or other FEOCs, as well as tax incentives that will strengthen producers across the supply chain.

For example, Gillard and Ronneberg write that “45X provides credits of $35/kWh to produce cells, while only providing 10% for production costs for upstream materials.”

“Increasing the 45X tax incentive to 25%,” they contend, “would put critical minerals and electrode active materials on par with battery module production, but still well below the credit for battery cell production on a per kWh basis.”

“Similarly, section 45W includes a loophole that allows firms owned or backed by FEOC countries to access the credit,” they added. “For all leased vehicle purchases - a significant portion of U.S. clean vehicle sales - this $7,500 tax credit has no restrictions on foreign entity of concern (FEOC) ownership, origin of sourced material, or U.S. production.”

The BATT Coalition is calling on the committee to advance changes to both tax credits that target producers of critical materials and battery parts, including:

• Increase section 45X for critical minerals and electrode active materials production to 25% of production costs.

• Make FEOCs ineligible for section 45X tax credits for advanced battery cell, pack, and electrode active materials production.

• Adopt Section 30D’s North American/FTA material sourcing and North American production requirements for the eligibility rules of Section 45X & 45W. This includes prohibitions against sourcing critical minerals and battery components from FEOCs.

“The domestic battery supply chain is at a tipping point,” Gillard and Ronneberg wrote in the letter. “Investments and policies today will have a lasting impact on the future of this industry.”