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TBBiden has finally written anti-globalization into law for EV...

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    Biden has finally written anti-globalization into law for EV tax credits.
    Basically no western tax concessions for non-western content.

    Hot off the press from Bloomberg

    The Biden administration released long-awaited rules designed to block electric-vehicle manufacturers from sourcing battery materials from China and other foreign adversaries, while giving automakers some flexibility to comply with the new mandates.
    The guidelines, which were required as part of a deal to extend the $7,500 tax credit through Biden's signature climate law, establish a 25% ownership threshold for a company or group to be classified as a foreign entity of concern, government speak for businesses or groups owned or controlled by US geopolitical foes. The restrictions will apply to battery components next year, then include suppliers of key battery raw materials, such as nickel and lithium, in 2025.
    The definition has wide-reaching implications because starting in 2024, vehicles containing any battery components manufactured or assembled by FEOCs will no longer qualify for the tax credit. In writing the highly-anticipated rules, the Biden administration has tried to balance two competing agendas - weaning US industry off of low-cost Chinese materials that dominate today's supply chains, while still incentivizing EV adoption to combat climate change.
    Delays in spelling out the requirements have left the mining, auto and battery industries in limbo, with just weeks until the new rules kick in. Outlining them now will give automakers and their suppliers some certainty in project planning.
    John Bozzella, president and chief executive officer of the major auto lobbying group Alliance for Automotive Innovation, praised the Treasury Department for finally providing clarity about the rules. He also lauded the agency for exempting requirements for trace materials for two years, a reprieve he called "significant and well-advised."
    Otherwise the EV tax credit may have only existed on paper, Bozzella wrote.
    Autos Drive America, which represents foreign automakers operating in the US like Hyundai Motor Co. and Toyota Motor Co., also welcomed the clarity, but urged the US to grandfather in more countries to provide critical minerals through free-trade agreements.
    Indonesia has been lobbying US officials for a free-trade pact that would make its products IRA-compliant. The US has already struck such a deal with Japan.
    Passed into law last year, the Inflation Reduction Act has attracted more than $100 billion of investment in the North American battery and EV supply chains as part of efforts to reduce reliance on China. However, the Asian nation's dominance of the global industry for now means that only a limited number of models would be currently eligible for the IRA tax credit.
    There will be a public comment period before the rules are finalized to take effect Jan. 1.
    We are reviewing the new Treasury guidance now, General Motors Co. spokeswoman Jeannine Ginivan said in a statement. "Due to GM's historic investments in the US and efforts to build more secure and resilient supply chains we believe GM is well positioned to maintain the consumer purchase incentive for many of our EVs in 2024 and beyond."
    Similar to Chips
    The 25% ownership limit is in line with language in the Chips and Science Act, which aims to reshore assembly of high-tech equipment like semiconductors. The law bars companies that receive Chips Act funds from engaging in joint projects with entities that have 25% or more Chinese ownership, among other restrictions.
    The list of qualifying car models may shrink further as the FEOC rules come into force over the next two years. Models that were grandfathered in under the first phase of rulemaking may become ineligible once the component and raw material rules are implemented.
    A large percentage of the raw materials needed to produce batteries are mined elsewhere - in many cases by Chinese-controlled companies that could be subject to the new restrictions.
    The world's biggest nickel producer, Tsingshan Holding Group Co., and top cobalt miner, CMOC Group Ltd., are both Chinese-owned companies with international mining operations.
    China accounts for 85% to 90% of global rare earth element mining and processing, and it refines 60% of the lithium, 65% of the nickel and 68% of the cobalt needed for EV batteries, according to a September research note by Goldman Sachs Group Inc. The bank also estimates that 65% of battery components, 71% of battery cells and 57% of the world's EVs are made in China.
    Loopholes Abound
    The rulemaking process sparked a year-long lobbying frenzy. Carmakers pushed hard for looser rules, arguing that severe restrictions would ratchet up the cost of EVs and that China's dominance of the supply chain makes it practically impossible to exclude. By contrast, US mining and recycling companies sought a tougher line in order to defend and fast-track domestic production of critical battery-making materials.
    Even with strict limits on Chinese ownership and influence, there are still large loopholes in the Inflation Reduction Act that undermine that goal, something Senator Joe Manchin, a clutch vote in passing the law, has criticized repeatedly.
    I will take every avenue and opportunity to reverse this unlawful, shameful proposed rule and protect our energy security, that includes pushing the Treasury Department to make revisions, pursuing a Congressional Review Act resolution and supporting any lawsuit against the rule, the West Virginia Democrat said in a statement Friday.
    EVs and hybrids that are leased instead of purchased aren't subject to the content requirements because they are classified as commercial vehicles. Treasury also made accommodations to give automakers more time to comply with some aspects of the rules, such as developing systems to physically track critical minerals and other low-value materials with more precision.
    RED
 
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