Biden Administration Tightens Controls on EV Supply Chain to Counter China and Russia

The U.S. Department of Energy (DOE) has issued proposed guidance on interpreting the definition of “foreign entity of concern” (FEOC) from the Bipartisan Infrastructure Law (BIL). This term determines eligibility for DOE grants related to battery materials and manufacturing.

The proposed interpretations define key terms and provide clarity on when foreign entities, specifically those from China, Russia, North Korea, and Iran (“covered nations”), would be considered FEOCs.

Notable aspects include:

  • Considering subnational governments and state-owned enterprises from covered nations as foreign governments
  • Defining control as 25% or more cumulative ownership of voting rights, board seats, or equity interest by a covered nation
  • Allowing control via licensing arrangements or contracts from covered nations that give effective control over production  
  • Providing guidance on calculating attenuated control through tiered ownership structures

The guidance aims to provide clear rules for battery supply chain companies to evaluate if they have FEOCs in their upstream suppliers.

DOE is seeking public comment on the proposed interpretations and guidance, including on potential attempts to evade restrictions and the use of the Secretary’s determination authority to address unauthorized conduct by covered nations.

Our Thoughts

America will rightly prioritize securing electric vehicle supply chains critical to its economic competitiveness and national security. Recognizing China’s leadership in EV sales and production, we should consider employing policy measures to protect this critical industry and allow it to prosper.

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