The Japan Automobile Manufacturers Association (JAMA) submitted comments today to the Department of the Treasury and the Internal Revenue Service in response to the notice of proposed rulemaking (NPRM) regarding Section 30D New Clean Vehicle Credit. Below is a summary of key points from JAMA’s comments.

Background

JAMA members have a shared legacy of over 60 years of operation in the U.S. and continue to have a significant impact on U.S. employment. Overall, the longstanding U.S.-Japan economic partnership has been strengthened by JAMA members’ sustained investments. This includes an extensive manufacturing presence that began in 1982 and now encompasses 24 manufacturing facilities and over $60.4 billion in cumulative manufacturing investment.

JAMA members also maintain a large research and development (R&D) presence that spans 43 facilities located across the country. As of 2022, JAMA members directly employ nearly 110,000 U.S. workers, and support 2.29 million private-sector U.S. jobs in total . Given that Japan is the largest foreign investor in the U.S., the economic ties between the two countries continue to grow and the alliance between the two countries provides security and economic prosperity for both nations.

JAMA’s Concerns Regarding the Clean Vehicle Tax Credits within the IRA

As JAMA members remain committed to the transition to electrified vehicles and continue to invest in the transition, our members concur with the broad industry consensus that this transition requires complementary measures, such as clean vehicle tax credits that promote consumer choice.

JAMA is encouraged by the Agreement Between the Government of the United States of America and the Government of Japan on Strengthening Critical Minerals Supply Chains, signed on March 28, 2023. This agreement represents the strength of the multi-faceted U.S.-Japan partnership, especially with respect to supporting resilient critical mineral supply chains to meet the growing demand for electrified vehicle battery production. Under these terms, the U.S. and Japan are collectively working to diversify and expand the EV supply chain amid continued efforts to align key environmental and economic security goals to help further reinforce the U.S.-Japan alliance.

However, building and bringing new facilities online takes time, and the timelines associated with the Section 30D tax credit’s critical minerals requirements remain very challenging.

Therefore,

• JAMA believes that the 30D credit is diminished by the North American assembly requirements, which substantially limits consumer choice and reduces the credit’s effectiveness in increasing consumer adoption of clean vehicles. As such, JAMA continues to assert that vehicles assembled in Japan should be eligible for the 30D incentive.

• To continue diversifying EV supply chains among allied nations and other strategic partners, clean vehicle battery components manufactured in Japan should be included in the calculation to determine eligibility for the 30D credit. This change in the IRA statutory language would help meet the need for additional capacity as Japanese-brand automakers invest and bring battery manufacturing investments online in the U.S.

• The Treasury Department and IRS should establish clear and timely guidelines relating to the “Foreign Entity of Concern” (FEOC) to aid both government and the automotive industry in assessing the future consumer adoption of clean vehicles.

• Regarding the reference to a “more stringent test” to determine compliance with the critical minerals requirements within 30D for vehicles placed in service after December 31, 2024, JAMA welcomes the opportunity to assess the justification(s) for and proposals for this test.

• Under step one of the four-step process for determining the percentage of the value of the battery components in a battery that contribute toward meeting the battery components requirement, JAMA seeks clarification on the definition of “substantially all.”

Click here to read JAMA’s full comment submission.

Visit JAMAinAmerica.org to learn more about JAMA members’ strong commitment to manufacturing and the American workforce.