The Biden administration plans to exclude Chinese entities from receiving tax credits for investments in the US electric vehicle (EV) supply chain. Both the Bipartisan Infrastructure Law and the Inflation Reduction Act explicitly exclude "Foreign Entities of Concern" (FEOC), including China, from receiving subsidies. The proposed rules aim to incentivize the domestic production of critical minerals for EV batteries but could pose challenges for companies partnered with Chinese entities. Senator Joe Manchin opposes the rules, but industry tracing for critical mineral production processes is underdeveloped. The FEOC rules are open for consultation for 30 days.
Frequently Asked Questions
Column: US looks to shut China out of its battery supply chain - MINING.COM
FAQ 1: What action has the US Biden administration taken regarding China and the battery supply chain?
Answer: The Biden administration has unveiled plans to exclude Chinese entities from receiving the generous tax credits that are available for the battery supply chain.
FAQ 2: Why does the US want to reduce Chinese influence in its battery supply chain?
Answer: Although the specific reasons are not detailed in the provided content, such actions often intend to decrease dependency on foreign entities, control strategic resources, and enhance national security related to critical supply chains.
FAQ 3: What materials does China control that are critical to battery production?
Answer: Globally, China controls the majority of the market for processing and refining critical minerals such as cobalt, lithium, rare earths, and others which are essential for battery manufacturing.
FAQ 4: How dominant is China in the electric vehicle battery production capacity?
Answer: China accounts for over 70% of global EV battery production capacity.
FAQ 5: What is the role of due diligence in US importers’ operations regarding supply chains?
Answer: Importers in the US are responsible for conducting adequate due diligence, effective supply chain tracing, and implementing supply chain management measures to comply with regulations.
FAQ 6: Is China tightening control over exports of any key battery materials?
Answer: Yes, China is looking to tighten exports of graphite, which is a key material for battery production.
FAQ 7: What is "friend-shoring" in the context of the US supply chain strategy?
Answer: "Friend-shoring" refers to the strategy of aligning supply chains with friendly nations and allies, potentially to marginalize adversarial or competitor nations like China.
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