Watch the replay of our webinar: Navigating the Inflation Reduction Act's new Foreign Entity of Concern rules for the US electric vehicle tax credit

Wood Mackenzie analysts discussed the impact of the Inflation Reduction Act’s new Foreign Entities of Concern rules for the 30D federal EV tax credit on the global metals and mining sector.

While the Department of Energy’s new guidance on 1 December 2023 eased determination, tracking and reporting requirements around rules-of-origin, it also tightened rules around which suppliers can US automakers source their battery materials and components from for tax credit qualification. While previous rules simply disqualified assets located in China and Russia, the new rules disqualify all global assets owned 25% or more by Chinese or Russian entities.

While ambiguity around the policy remains, we expect the rules to bring into question the potential eligibility of major Indonesian nickel, Australian lithium, and DRC cobalt sources – Sources that were tipped to supply a significant portion of the US EV market this decade. A lack of credit eligibility for a major portion of the market – if combined with insufficient reductions in North American battery manufacturing costs – will impact the US’ EV penetration rate in the mid-term.

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• Suzanne Shaw, Head of Energy Transition & Battery Raw Materials
• Max Reid, Principal Analyst, Electric Vehicles & Battery Supply Chain Service
• Martin Kelly, Vice President Research
• Prateek Biswas, Analyst of Transport and Materials