The initial slate of electric vehicles qualifying for the new $7,500 federal tax credit in the U.S. Inflation Reduction Act was announced earlier this month. Key to eligibility is the source of critical minerals used in their batteries. While the list of acceptable nations of origin is still being worked out, there's an important practical question the IRS should ask: Do carmakers really know where their critical minerals come from?

This is not the first time U.S. companies have been required to trace the origins of minerals. Section 1502 of the landmark Dodd-Frank Wall Street Reform Act requires electronics manufacturers to disclose whether their products contain “conflict minerals,” that is, tantalum, tin, tungsten, or gold from the Democratic Republic of the Congo or adjoining countries. It turns out that meeting this requirement has been fraught with uncertainty. Six years after implementation, some 80 percent of companies reporting to the SEC were still “unable to determine their raw materials' country of origin,” according to a 2017 study in Harvard Business Review. Even now, Fortune 500 companies produce vague statements like, “we found no reasonable basis for concluding that ()” their products contain conflict minerals.

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