Recently, the U.S. Department of the Treasury issued an announcement stating that, starting from 2024, electric vehicles produced in the United States that include battery components manufactured or assembled in countries such as China will no longer qualify for the tax credits of up to $7,500 provided by the U.S. Inflation Reduction Act (IRA).
According to reports from relevant media, this announcement primarily targets companies from countries including China, Russia, North Korea, Iran, etc. For instance, when a company is registered or has 25% state ownership in one of the mentioned countries, it will be defined as a FEOC (Foreign Entity of Concern).
This implies that starting next year, U.S. new energy vehicles can only enjoy tax-free policies if they do not use batteries manufactured or assembled by "Foreign Entities of Concern" (FEOC). Additionally, after 2025, vehicles eligible for tax exemptions cannot contain key minerals such as nickel and lithium extracted, processed, or recycled by such entities.
As early as April of this year, the U.S. government released detailed regulations on the Inflation Reduction Act. Simultaneously, it disclosed the list of electric vehicles eligible for tax credits, noteworthy for the exclusion of popular models from Japanese and Korean brands. The regulations stipulate that only electric vehicles finally assembled in North America are eligible for a maximum subsidy of $7,500 through tax deductions. Furthermore, a vehicle using battery components assembled in North America by over 50% can receive a subsidy of $3,750 per vehicle, and if it uses over 40% of critical minerals mined and processed in the United States or countries signing free trade agreements with the United States, it can also enjoy a subsidy of $3,750 per vehicle.
