On December 1, the U.S. Treasury and Energy Departments issued preliminary guidance on the Foreign Entity of Concern (FEOC) under the Inflation Reduction Act (IRA) for the green vehicle tax credit provision (30D).
Under the Inflation Reduction Act (IRA) and its Green Vehicle Tax Credit provision (30D), environmentally friendly vehicles with batteries involving a Foreign Entity of Concern (FEOC) are excluded from tax credit benefits.
Under the interim guidance, foreign concern countries include China, Russia, Iran, and North Korea. Foreign entities are considered FEOC if they are established or located in these countries, have a significant business presence, or are owned, controlled, or directed by the government of a concern country.
Auto manufacturers must set up a system to trace critical minerals by late 2026. Traceability certification for minor minerals is excluded until then due to supply chain challenges and low added value.
The FEOC regulations apply to battery components from January 1, 2024, and to critical minerals from January 1, 2025.
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