Enlarge / Until the beginning of this year, an EV's tax credit was determined by the storage capacity of its battery pack. Now, the tax credit is linked to local manufacturing of components and locally sourced critical minerals. (credit: Julian Stratenschulte/picture alliance via Getty Images)

It's been a confusing few months for potential electric vehicle customers after the introduction of complicated new rules for the clean vehicle tax credit at the beginning of the year. Now the rules are changing once again.

On Thursday, the Internal Revenue Service published a draft of new guidance for the $7,500 clean vehicle tax credit and said that starting on April 18, it will begin enforcing the domestic sourcing requirement for battery minerals and components. As a result, many new EVs may not qualify for the tax credit.

Tell me the rules again

As we've detailed before , the revised clean vehicle tax credit has quite a few conditions that must be satisfied in order for that vehicle to be eligible.

Enlarge (credit: D3Damon)

In February 2022, Redwood Materials began a pilot program in California to recycle electric vehicle batteries. The startup partnered with the state government as well as Ford, Volvo , Volkswagen , and Toyota, plus the car dismantling industry, in order to source end-of-life lithium-ion and nickel metal hydride traction batteries. Now, a year in, it has shared some findings from those first 12 months.

In total, Redwood recovered 1,268 battery packs, amounting to more than 500,000 lbs (226,796 kg). The vast majority of these were from cars that had reached the end of their particular road—Redwood says that less than 5 percent were "damaged, defective, or recalled."

Those packs came from 19 different EV and hybrid models, and the vast majority—82 percent in total—was lithium-ion, with the remaining 18 percent NiMH cells. Redwood says it was able to recover 95 percent of the lithium, cobalt, nickel, copper, and other metals from these packs. And as we noted last month , the company is already producing production-grade copper anode foil.

Enlarge / Aerial view of a dirt road leading up through The Thacker Pass Lithium mining area in the arid Nevada desert. (credit: gchapel | iStock / Getty Images Plus )

Construction will reportedly soon begin on a mine that’s expected to become the United States’ largest source of lithium. This mine is viewed as critical to Joe Biden’s $2 trillion clean energy plan by powering the nation’s increased production of electric vehicles.

On Monday, a US district judge denied the majority of legal challenges raised by environmentalists, ranchers, and indigenous tribes, upholding that the federal government’s decision to approve the Thacker Pass mine in 2020 was largely not made in error. However, chief judge Miranda Du did agree with one of the protesters' claims, ordering the US Bureau of Land Management (BLM) to complete a fresh review to determine if Lithium Americas Corp has the right to deposit waste rock on 1,300 acres of public land that the mining project wants to use as a waste site.

Because this waste site may not contain valuable minerals, there’s a possibility that this land may not be validly claimed as a waste site under current US mining laws, Du wrote in the order . A mining law from 1872 requires that mining projects must validate all claims to public lands before gaining federal approval, and that means Lithium Americas must now provide evidence that valuable minerals have been found on the proposed Thacker Pass waste site to resume the project.

Enlarge / An EV's battery represents as much as 25 percent of the cost of the car, so it's understandable that people are nervous about longevity. (credit: Aranga87/Getty Images)

It's often said that the easiest way to get people to buy an electric vehicle is to let them test-drive one . But here in the US, EVs only accounted for 3 percent of the 15 million new vehicles sold in 2021. That means there are an awful lot of misconceptions out there when it comes to these newfangled machines.

The top concern is probably range anxiety, a fear that is usually dispelled as someone gets used to waking up to a full battery every morning. I won't dwell on that today, but the next-most common point of confusion about EVs has to be the traction battery's longevity, or potential lack thereof.

It's an understandable concern; many of us are used to using consumer electronic devices powered by rechargable batteries that develop what's known as "memory." The effect is caused by repeatedly charging a cell before it has been fully depleted, resulting in the cell "forgetting" that it can deplete itself further. The lithium-ion cells used by EVs aren't really affected by the memory effect, but they can degrade storage capacity if subjected to too many fast charges or if their thermal management isn't taken seriously.

Enlarge / A VW worker dismantles an electric vehicle battery pack for recycling. (credit: Volkswagen)

Volkswagen Group announced on Thursday that it is consolidating its battery development and production in a new project called Mission SalzGiga. The name refers to Salzgitter in Germany, where VW has built more than 63 million internal combustion engines—it has now broken ground on a massive new battery factory at the site, the first of six planned for Europe. Each plant should be able to accommodate an annual production capacity of 40 GWh, sufficient to power 500,000 electric vehicles.

To that end, the company has set up a new Salzgitter-based business unit called PowerCo that will cover all of the automaker's global battery activities. VW says it will require more than $20.4 billion (€20 billion) in investment between now and 2030, but with an equal potential in revenue, plus the addition of 20,000 new jobs.

"In building our first in-house cell factory, we are consistently implementing our technology roadmap," said Thomas Schmall, VW board member in charge of technology. "PowerCo will become a global battery player. The company's major strength will be vertical integration from raw materials and the cell right through to recycling. In future, we will handle all the relevant activities in-house and will gain a strategic competitive advantage in the race to take the lead in e-mobility."

Enlarge / A solid-state lithium cell is pressed together by Solid Power's new automated EV cell pilot line.

Solid Power, a Colorado-based battery developer, moved one step closer to producing solid-state batteries for electric vehicles on Monday. The company has completed an automated "EV cell pilot line" with the capacity to make around 15,000 cells per year, which will be used first by Solid Power and then by its OEM partners for testing.

"The installation of this EV cell pilot line will allow us to produce EV-scale cells suitable for initiating the formal automotive qualification process. Over the coming quarters, we will work to bring the EV cell pilot line up to its full operational capability and look forward to delivering EV-scale all-solid-state cells to our partners later this year," said Solid Power CEO Doug Campbell.

Solid-state batteries differ from the lithium-ion batteries currently used in EVs in that they replace the liquid electrolyte with a solid layer between the anode and cathode. It's an attractive technology for multiple reasons: Solid-state cells should have a higher energy density, they should be able to charge more quickly, and they should be safer, as they're nonflammable (which should further reduce the pack density and weight, as it will need less-robust protection).