January 4, 2024: EnerSys said on December 19 it is set to receive an unexpected earnings boost after the US government unveiled proposed new guidance on battery components and materials qualifying for tax credits.

The US Treasury and Internal Revenue Service released the proposed guidance on December 14 of section 45X of the Advanced Manufacturing Production Credit (AMPC) program — part of the Inflation Reduction Act.

EnerSys said the guidance indicates it could now expect annual tax credits recorded as a reduction to the cost of goods sold and not subject to taxation to be in the range of around $120 million to $160 million up to 2032.

This would represent an annual increase to its anticipated tax credits of around $35 million to $45 million, on top of the previously announced annual range of some $80 million to $120 million.

EnerSys said it will continue to evaluate the guidance and issue an update during its scheduled third-quarter 2024 earnings results conference call next month.

However, president and CEO David Shaffer (pictured) said 45X credits underlined the critical role EnerSys batteries play in supporting the global energy transition.

Section 45X was created as part of the Inflation Reduction Act and signed into law in August 2022.

The section provides AMPCs for battery cells and battery modules produced in the US with an energy density of not less than 100 watt-hours per litre.