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Biden Admin Opens Door For Chinese Firms To Cash In On EV Subsidies

via Forbes Breaking News

The Biden administration released guidance to determine which electric vehicles are eligible for tax credits under the 2022 Inflation Reduction Act.

The guidance defines “foreign entity of concern” and prohibits EVs assembled with components from certain nations from receiving the $7,500 federal credit.

The administration aims to bolster the domestic EV industry and onshore production, but the definition of an FEOC raises concerns about Chinese firms benefiting indirectly. (Trending: Another Major Company Goes Woke And Goes Broke)

The White House Office of Clean Energy Innovation and Implementation and Energy Department specifically defines the term “foreign entity of concern.”

The guidance explains that the federal government interprets an FEOC as an entity “incorporated in, headquartered in and operating within” one of the covered nations: China, Russia, North Korea and Iran.

“The Inflation Reduction Act has unleashed an investment and manufacturing boom in the United States, and since President Biden enacted the law, ecosystems have developed in communities nationwide to onshore the clean vehicle supply chain,” Treasury Secretary Janet Yellen said in a statement.

“President Biden entered office determined to reverse the decades-long trend of letting jobs and factories go overseas to China,” added White House clean energy czar John Podesta.

“Thanks to the Investing in America agenda and today’s important guidance from Treasury and the Department of Energy, we’re helping ensure that the electric vehicle future will be made in America.”

The Treasury Department also created a multi-year exemption for battery materials.

The guidance outlines other requirements for EV eligibility, including sourcing critical minerals and battery components.

“While the definition of FEOC in the IRA is clear, your formal interpretation of it is crucial to meeting the IRA’s goals of strengthening our domestic mineral security, increasing electric vehicle production and manufacturing within our country, and building stronger partnerships with our reliable allies and partners abroad,” Senate Energy and Natural Resources Committee Chairman Joe Manchin, D-W.Va., wrote to Yellen last month.

“Maintaining the strictest possible standards for FEOCs will safeguard American energy security, encourage domestic industry, and ultimately protect American taxpayer dollars,” continued Manchin.

“As you might expect, I am incredibly concerned by recent reports that suggest Chinese battery companies are actively pursuing business opportunities and arrangements, including joint ventures and investments, in South Korea and Morocco to take advantage of the IRA.”

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