The US, Japan Reach Agreement on EV Battery Minerals

America and Japan recently signed a sectoral agreement of 10 pages regarding the minerals used in EV batteries in order to strengthen the supply chains for their battery products and offer Japanese manufacturers more access to a revised $7,500 United States electric vehicle tax break. The agreement that was hastily drafted forbids the two nations from adopting bilateral trade limits on the most essential minerals such as lithium, cobalt, nickel, manganese and graphite for electric vehicle batteries, according to senior officials in Biden’s administration.

Likewise, the agreement seeks to lessen the United States and Japan’s dependence on Chinese suppliers for the critical minerals by demanding cooperation to resist nonmarket-based policies as well as practices of other nations in the industry and on performing investment evaluations of foreign ventures in their vital mineral supply network. Trade agreements with a focus on minerals are only one of the methods Biden’s administration plans to use to provide trusted partners access to electric vehicle tax breaks of up to $7,500 on each vehicle included in the 2022 inflation-reduction legislation. A similar agreement with the European Union is currently being negotiated by the Biden administration.

The 50% credit reservation for consumers buying cars and batteries made in North America is a key cause of conflict with the European Union, Japan and South Korea. These countries fear that American incentives would curtail investments in batteries and electric vehicles beyond their borders.

The remaining half of the credit is conditional upon at least 40% of the value of essential minerals contained in the battery being extracted, refined and recycled in the United States or in one of the nations with which America has a free trade agreement.

While speaking to Tokyo reporters, Yasutoshi Nishimura stated that electric vehicles built with batteries whose mineral contents are extracted or refined in Japan were anticipated to meet the criteria to be eligible for a certain portion of the United States tax incentives. Previously, senior officials had stated that decision-making authority lay with the American Treasury, which was due to provide guidance on sourcing specifications for the electric vehicle tax credits toward the end of the week, which was eagerly anticipated by the auto industry, the mining industry and the battery industry.

Nishimura added that securing critical minerals necessary for manufacturing was an urgent concern because the electric vehicle demand, as well as that of batteries, is anticipated to expand dramatically.

Every couple of years, both nations agree to evaluate the battery minerals deal and decide if it should be terminated or modified.

Industry players such as Mullen Automotive Inc. (NASDAQ: MULN) will likely be following the different discussions that the U.S. government is having with different countries or blocs to promote rapid EV adoption.

NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at

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