I have been doing some research on the impact to batteries and NVX as a result of the OBBB. The below has been located via a combination of available online sources, the actual bill itself and a bit of AI generation in parts, although I have tried to validate the latter where possible as AI gets plenty of things wrong. If I have made any errors please correct/add your thoughts.
There is some nuance to this discussion though. Direct impacts to NVX are critical, but what I am really interested in is how demand will be impacted, which will ultimately be the biggest impact on onshore manufacturing and production attempting to scale up in the US. The IRA introduced a flood of business demand in the US; it makes no sense for them to remain if the current operating environment inc tariffs no longer makes sense.
Impacts
- High level TLDR is oil, natural gas, batteries and (some) nuclear are the big winners. Renewables face a much tougher road.
- EVs a big loser. Tax credit repealed within 180 days. EV chargers have also been hit. A good portion of the battery production either planned, put on hold or in the works right now is the result of anticipated EV demand. This will have a significant impact on demand in the US and maybe even impact planned/on hold facilities.
- Battery storage: tax credits preserved until 2033. Total battery storage capacity is 15 GW higher under the OBBB, with a marked shift toward longer duration storage (good for NVX's synthetic). For storage and all other carbon-free generation, projects commencing construction between 1/1/25 and before end of 2033 can claim full tax cuts if they meet new FEOC rules. Then credit steps down to 75% in 2034, 50% in 2035 then 0% thereafter. Total U.S. storage capacity was about 26 GW in 2024. Ultimately OBBB repeals consumer credits (residential), focusing on commercial.
- Phase out of the incentives for solar and wind projects. Wind and solar projects commencing between 1/1/26 & 12 months from enactment of OBBB (so around July 4, 2026) can also claim full tax cuts IF they meet new Foreign Entity of Concern (FEOC) rules. Wind and solar commencing after 12 months from enactment must meet FEOC rules AND be placed in service by end of 2027. Also new taxes on Chinese components. Wind capacity is 26 GW lower in the OBBB case by 2034, with no new wind built over the next decade that isn’t already in the development stage. Solar capacity is 118 GW lower in the OBBB case and by 2029, growth is practically non-existent.
- More foreign component restrictions which should aid onshore supply but delay projects and increase costs.
- 45X advanced mfg credit remains in place. Obviously a boost for NVX and broader critical mineral refining, processing, recycling, and recovery.
- 48C also maintained. Congress capped total allocations at $10 billion. NVX previously discussed using this or the 45X, but both options are now still on the table.
- Loan Programs Office survives with significant funding authority.
- Nuclear energy was a big winner. Not so relevant for us?
- Significant increase to defense spending, including funds for personnel, shipbuilding, missile defense, weapons development, and nuclear forces. FEOC, tariffs and national security concerns means they will need their anode from onshore.
- New Presidential Memorandum signed instructing over a dozen US federal agencies to streamline and accelerate the funding process for energy infrastructure and critical mineral projects. We know NVX is in the loan process stage with DoD.
My short take is battery storage and defence likely become the most plausible end points for NVX's anode. EV adoption will still grow in the US, but the rate of which will this occurs will no doubt be impacted. Importantly FEOC and what we suspect will be some form of tariffs will apply, meaning onshore anode should still be in demand. Also importantly, NVX should still have support avenues with the government outside of tariffs, which is critical. This includes 45x/48c which I think is the biggest win of all, although we still need demand within the US to justify customer build out. Tariffs are a blunt instrument and do little to assist onshore production in scaling, but will hopefully reduce onshore business looking elsewhere for anode.
What have I missed? Interested in all thoughts.
(20min delay)