More EVs to get tax credits under sweeping rule changes - but critics slam Biden for handing a 'blank check to China'

More electric vehicles could be eligible for federal tax credits worth up to $7,500 under a sweeping loosening of rules by the White House.

The Treasury Department announced it would give automakers more time to comply with new provisions which about where battery minerals are sourced from. 

However, President Biden has come under fire for the decision which critics say is like handing a 'blank check' to China.

Federal Tax Credits for plug-in hybrid and electric vehicles were first brought in by the 2022 Inflation Reduction Act as part of Biden's plan to encourage mass adoption of the eco-cars.

They amount to either a $7,500 or $3,750 discount on the eligible models. The Alliance for Automotive Innovation estimates only 13 out of the 114 EVs sold in the US qualify for the full credit.

But experts say the opaque rules make it hard for automakers and lawmakers to know for sure.

Qualifying for the credits depends on a person's income, the price of vehicles and requirements related to battery makeup and minerals. 

To get the credits, EVs must be assembled in North America. Some plug-in hybrids also can qualify. 

The criteria were complicated further this year by new rules which blocked the credit for vehicles that contain battery materials from China and other nations 'of concern' to the United States. Those included Russia, North Korea and Iran.

But the latest u-turn means small amounts of graphite and other minerals used in batteries would be exempt from the restriction until 2027.

Officials said this is because their country of origin is almost impossible to trace. Without the exemption, eligible cars could be knocked off the tax credit window due to tiny amounts of materials from unknown sources. 

It is unclear how many more EV models will now benefit from the credit as automakers race to trace the origin of all the minerals in their supply chain.

The decision has come under fire from politicians and trade bodies over the gift it could give to China.

West Virginia senators Joe Manchin, the Democratic chairman of the Senate Energy and Natural Resources Committee, accused Biden of 'effectively endorsing 'Made in China.'

Rich Nolan, president and CEO of the National Mining Association, told Associated Press: 'Congress created these tax incentives to secure our supply chains and generate American jobs while supporting EV adoption. 

'They did not intend for loopholes to be created that essentially amount to a blank check from the American taxpayer to China.'

The move came after significant pressure from the motoring industry. 

This year half of the critical minerals in an EV's battery have to be mined or processed in the U.S., or a country with which it has a free trade agreement. Sixty percent of the battery parts have to be made or assembled in North America.

John Bozzella, CEO of the Alliance for Automotive Innovation, said in a statement: 'The EV transition requires nothing short of a complete transformation of the U.S. industrial base.'

It comes as EV sales across the board start to stall despite the federal incentive.

This year Tesla has seen its first annual drop in sales since the beginning of the pandemic since 2020.  

The slowdown appears to have confirmed automakers' fears they pursued EV adoption too quickly.