The United States has issued new regulations on electric vehicle subsidies, restricting Chinese battery manufacturers and other new energy vehicle supply chain companies from receiving tax credits. The new regulations, under the Inflation Reduction Act, will exclude companies that are considered “foreign entities of concern” (FEOC) from benefiting from tax credits.
Starting in 2024, electric vehicles containing battery components manufactured or assembled by FEOC will not be eligible for tax credits. Additionally, starting in 2025, vehicles cannot contain critical minerals extracted, priced, or recycled by FEOC, including lithium, cobalt, and nickel. FEOC targets companies in China, Russia, North Korea, and Iran.
The United States is aiming to reduce its electric vehicle industry’s dependence on China. However, analysts warn that this crackdown on China’s new energy industry chain could ultimately slow down the US’s own energy transformation. Chinese companies currently occupy more than half of the global electric vehicle battery market share and 90% of the market share in the supply of some battery materials.
The Chinese Embassy in the United States criticized the regulations, calling them another example of U.S. unilateralism and economic bullying, and stated that it is not conducive to the stability and recovery of the global economy or to the joint response of all countries to the challenge of climate change.
The new regulations are subject to a public comment period to receive feedback from the automotive industry before being finalized. However, the financial community warns that the content, data, and tools in the article do not constitute any investment advice and are for reference only. The stock market is risky, so caution should be exercised when investing.