Treasury, DOE Release Proposed Guidance to Strengthen Domestic Supply Chains for Batteries and Electric Vehicles, Ensure the U.S. Leads the Clean Vehicle Future
Today, the Department of Energy (DOE) published proposed guidance clarifying the definition of “Foreign Entity of Concern” (FEOC) in the Bipartisan Infrastructure Law (BIL), while the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published related guidance on compliance with the FEOC prohibitions associated with the Inflation Reduction Act (IRA)’s Section 30D Clean Vehicle Tax Credit. These requirements will encourage diversified and resilient critical mineral and battery component supply chains; support clean vehicle adoption and good-paying U.S. jobs in the EV and battery industries; and provide clarity and certainty to U.S. automakers, battery makers, and producers of critical minerals.
Bidenomics and the Biden-Harris Administration’s Investing in America Agenda have already driven transformative new investments in clean technologies and new good-paying American jobs. Today’s proposed guidance would build on this historic progress by providing clear pathways for electric vehicle and battery manufacturers to access BIL battery grants and Section 30D tax credits, as amended by the IRA.
DOE’s guidance includes a proposed interpretation of the term “Foreign Entity of Concern” for the purposes of the agency’s BIL Battery Manufacturing and Recycling Grants. The guidance proposes that an entity incorporated in, headquartered in, or performing the relevant activities in a “covered nation” (as defined by statute) is classified as a FEOC. The guidance would also classify as a FEOC a company with at least 25 percent voting interest, board seats, or equity interests held by the government of a covered nation (including a senior official of such a government), regardless of where the relevant activities occur. Finally, the guidance proposes to address how technology licenses or other contractual agreements could be considered vectors of control by the government of a covered nation in specific circumstances, such as when a contract to license a technology renders a FEOC effectively in control of production.
In parallel, Treasury and IRS are announcing a Notice of Proposed Rulemaking (NPRM) and additional sub-regulatory guidance implementing DOE’s proposed FEOC interpretation in the context of the 30D Clean Vehicle Tax Credit. The NPRM includes proposed rules for determining whether electric vehicle (EV) battery components and applicable critical minerals (and associated constituent materials) are “FEOC-compliant”. The proposed rules would require manufacturers to conduct due diligence of battery components starting in 2024 and applicable critical minerals starting in 2025, as required by the IRA.
Together, both sets of guidance will encourage diversified and resilient critical mineral and battery component supply chains; support clean vehicle adoption and good-paying U.S. jobs in the EV and battery industries; and provide clarity and certainty to U.S. automakers, battery makers, and producers of critical minerals.
Since President Biden enacted the Inflation Reduction Act in 2022, companies have announced nearly $100 billion in new clean vehicle and battery investments in the United States. At the same time, public funding from the Bipartisan Infrastructure Law and the Inflation Reduction Act, such as $6 billion in awards from DOE’s Battery Processing and Manufacturing Grants, is directly building domestic supply chains in these important industries. Today’s guidance provides automakers, battery manufacturers, and the domestic critical minerals industry with the clarity they need to continue making these historic investments well into the future—ensuring that the United States leads the clean vehicle transition and that benefits accrue to American workers and companies.
To learn more about the ways that Bidenomics is driving historic investments to onshore clean energy supply chains, create good-paying jobs, and build a clean energy future that works for all of America’s families, visit www.invest.gov.
