A plan to tax lithium, widely used in electric vehicle batteries, was passed in California as part of the state’s effort to generate revenue for environmental remediation projects.
The decision is made despite reservations from battery industry players, some argue that the lithium tax would harm the industry. Two of California’s most notable lithium companies, such as EnergySource Minerals LLC, have suggested that the tax could scare away potential customers.
The California lithium tax was approved by Governor Gavin Newsom as part of the state budget that must pass on Thursday. As noted in a Reuters reported, the state legislature signed off on the levy during discussions Wednesday night.
According to the state decision, the lithium tax will apply a flat rate per tonne and will take effect in January. The lithium tax is expected to be reviewed annually, with state officials agreeing to consider a potential change to a percentage-based tax model.
But while California officials appear optimistic about the state’s lithium tax, industry players have stated that the levy will likely fall. do more harm than good. According to Control Thermal Resources Ltd, the lithium tax will force the company to miss deadlines for delivering key battery components to electric vehicle makers like General Motors in 2024 and Stellantis NV the following year.
On the other hand, EnergySource Minerals has noted that their discussions with potential financier and an automaker that was halted due to the lithium tax.
Rod Colwell, chief executive officer of Control Thermal, also stated that California’s lithium tax would have a huge impact on players in the industry as it would make locally produced lithium more expensive than those exported. from countries like China.
“Tariff support to make it less expensive to import lithium from China for automakers to secure will wreak havoc on this promising California industry before it even starts,” he said.
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