North America

Material Assistance Cost Ratio Sets New Sourcing Thresholds Sourcing rules now apply to 45X and 48E tax credits The Material Assistance Cost Ratio MACR) sets a threshold for the proportion of a projectʼs direct material costs or facility cost that must come from non-PFE sources to qualify for tax credits. One notable relaxation is the 0% MACR requirement for critical minerals through the end of 2029, effectively allowing battery manufacturers to use PFE-linked raw materials without penalty. However, this relief is short-lived as more stringent mineral-by-mineral guidance is expected by 31 December 2027. As a result, manufacturers may only have a two-year window of clarity before compliance tightens again. For battery components, MACR compliance is generally more manageable. Cathodes, which represent the largest portion of battery material costs, can help meet the threshold as long as they are sourced from non-PFE suppliers - and provided the rules stop at ‘tier-1 levelʼ without tracing upstream to pCAM or raw materials. By contrast, energy storage developers face greater difficulty. LFP battery packs imported from China make up over 60% of total BESS container costs in 2025. This puts the non-PFE share below 40%, well under the 55% MACR threshold coming into effect in 2026. As a result, BESS developers were rushing to meet the “construction startˮ exemption deadline to avoid MACR-related disqualification altogether.

Source: Content & analysis provided by CRU Group Distinguished Partner). For more information, visit crugroup.com.

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