By Madeline Lefton, Head of Government Affairs at Enovix
Enovix is excited by two recent pieces of legislation that lay the groundwork for major improvements in the United States’ ability to grow a fully domestic lithium battery supply chain. The Bipartisan Infrastructure Law and the Inflation Reduction Act, both take significant steps to “re-home” and expand US Li-ion battery manufacturing capacity.
Following recommendations from a 100-day review of the Li-ion battery industry at the beginning of the Biden administration, in part, the Bipartisan Infrastructure law focuses on supporting the electric vehicle and storage scale battery supply chain.[1] The law allocates $7 billion to establish a domestic advanced lithium ion battery supply chain.[2] This tranche of funds can, among other efforts, be used to fund battery cell and pack manufacturing facilities, through the competitive process.[3]
The Inflation Reduction Act goes further with direct and indirect provisions to boost the lithium ion battery industry. The IRA directly targets clean energy manufacturers including lithium battery cell and pack manufacturers with the New Advanced Manufacturing Production Tax Credit.[4] This provision also allows for direct payments in lieu of tax credits, a boon for young companies that will carry losses and little tax liability due to heavy upfront costs.[5] Another relevant provision is the Credit for Residential Clean Energy. This tax credit has been on the books for some time, known as the Investment Tax Credit, but was expanded to include battery storage as eligible for the subsidy. Now, residential storage systems can claim a 30 percent tax credit if they are over 3 kWh of battery storage. Commercial storage projects are eligible if they install over 5 kWh of battery storage.[6] The Clean Vehicle Tax Credit was also preserved, maintaining the $7,500 subsidy for purchasers of electric vehicles provided that the vehicles meet certain US content requirements. Eligible vehicles must have US content scaling up from 40 percent by 2024 to 100 percent by 2029.[7]
Between the BIL and the IRA, the various policies set out to encourage adoption of clean energy products and expand clean energy markets among producers, manufacturers and end user consumers.[8] This vision for rapid expansion requires producers and manufacturers to work in tandem, such as with US content requirements. Additionally, many of the provisions ramp down and eventually sunset in approximately 10 years, encouraging early consumer adoption.[9] For the battery industry, this will require quickly building out the capacity to meet customer demand.
While Enovix designs and assembles its batteries in the U.S., we use foreign components. As more of the upstream lithium battery industry develops domestically, we are ready to play a part in helping reestablish the domestic supply chain. If the IRA and BIL impact the electric vehicle and li-ion battery market as intended by Congress, consumers may be able to make more meaningful choices around the types of clean energy products they purchase and these markets will hopefully expand.[10] Enovix aims to do our part to help advance the industry demand anticipated with these major public investments in the advanced energy space.
[2] Id.
[3] Id.
[4] Sec. 13502 Advanced Manufacturing Production Credit; Text — H.R.5376–117th Congress (2021–2022): Inflation Reduction Act of 2022 | Congress.gov | Library of Congress
[5] Id.
[6] Sec. 13302 Residential Clean Energy Credit; Text — H.R.5376–117th Congress (2021–2022): Inflation Reduction Act of 2022 | Congress.gov | Library of Congress
[7] Sec. 13401 Clean Vehicle Credit; Text — H.R.5376–117th Congress (2021–2022): Inflation Reduction Act of 2022 | Congress.gov | Library of Congress
[8] FACT SHEET: The Inflation Reduction Act Supports Workers and Families — The White House; President Biden’s Bipartisan Infrastructure Law — The White House
[9] Sec. 13401 Clean Vehicle Credit
[10] 8.18 InflationReductionAct_Factsheet_Final.pdf (energy.gov)
