U.S. Sets Stringent Limits on Chinese Content for EV Tax Credit

(Bloomberg) — The number of electric vehicles eligible for consumer tax credits in the U.S. is poised to shrink after the Biden administration set rigorous limits on the amount of materials manufacturers can source from China and other foreign adversaries.

The guidelines, which were required as part of a deal to extend the $7,500 tax credit through Biden’s signature climate law, set a 25% ownership threshold for a company or group to be classified as a foreign entity of concern (FEOC). The restrictions will apply to battery components next year, then extend to suppliers of key battery raw materials, such as nickel and lithium, in 2025.