(Reuters) – The United States and the European Commission have negotiated a possible agreement to allow for electric vehicles with critical minerals extracted or processed in the European Union to qualify for U.S. green subsidies, Handelsblatt reported on Thursday.
Lithium, manganese, nickel and cobalt – key minerals for battery production – would fall under the agreement and should therefore qualify for subsidies under the U.S. $430-billion Inflation Reduction Act (IRA) package, according to the draft paper seen by German business paper Handelsblatt.
Under the IRA rules, electric vehicles can qualify for subsidies only if at least 40% of the critical minerals within come from the U.S. or a country it has a free trade agreement with.
President Joe Biden and European Commission President Ursula von der Leyen agreed in early March that the two sides would launch talks on a raw material agreement that would allow vehicles with minerals sourced or processed in Europe to benefit.
A European Commission spokesperson was not immediately available for comment.
(Reporting by Victoria Waldersee; Editing by Leslie Adler)