WASHINGTON, D.C. — The U.S. Department of Energy (DOE) has issued its final interpretive guidance on the definition of "foreign entity of concern" (FEOC), aiming to restrict the participation of FEOCs in domestic battery supply chains and promote the growth of domestic battery materials processing and manufacturing.
The guidance clarifies the criteria for identifying FEOCs, stating that an entity can be considered a FEOC if it meets specific conditions related to its ownership, control, or ties to covered nations. According to the guidance, an entity can be classified as a FEOC if it is headquartered, incorporated, or conducts relevant activities in a covered nation, or if a significant portion of its voting rights, board seats, or equity interest is held by the government of a covered nation. Additionally, an entity can be deemed a FEOC if it is effectively controlled by a FEOC through a license or contract.
In line with this guidance, the Department of the Treasury and the Internal Revenue Service have finalized a rule that disqualifies electric vehicles (EVs) containing battery components manufactured or assembled by a FEOC from receiving the Clean Vehicle Tax Credit starting in 2024. Furthermore, EVs with batteries containing critical minerals sourced from a FEOC will be ineligible for the tax credit starting in 2025.
The DOE's Office of Manufacturing and Energy Supply Chains (MESC) will prioritize applications in the Battery Materials Processing and Manufacturing grant program that do not utilize battery materials supplied by FEOCs.
The guidance and associated rules are part of a broader effort to enhance the domestic battery supply chain and reduce reliance on foreign sources for critical minerals. The Biden-Harris Administration's Investing in America agenda aims to secure a reliable and sustainable battery supply chain primarily sourced in America and allied trading partners.
For further inquiries regarding DOE's final interpretive guidance, stakeholders can contact FEOCguidance@hq.doe.gov.
