Japan and the United States have signed an agreement to support EVs that run on batteries produced in Japan. The deal aims to strengthen supply chains for key minerals used in EV batteries.

The two countries announced the deal on Tuesday. The minerals covered in the pact include lithium, nickel and cobalt.

It comes after the US introduced a policy last year that gave customers who purchased an EV 7,500 dollars' worth of tax credits. But the measure did not apply to EVs that run on minerals processed in Japan, even if the vehicles themselves were made in the US.

The new agreement changes this. Customers who buy a Japanese EV will receive half of the amount of tax credits as long as the vehicle is made in North America, even if it runs on minerals processed in Japan. The countries say the agreement will help Japanese automakers compete in the US market.