On Friday (US time) the US IRS released proposed guidance on the clean provisions of the Inflation Reduction Act (IRA). This is a big deal and will likely be celebrated by China hawks seeking to cut US reliance on mainland China. The US and others are still incredibly reliant on Chinese battery components and minerals. This guidance (in addition to other ongoing fiscal and policy support) is designed to spur domestic manufacturing and strengthen ex China supply chains. After all, you don't want to be in a position one day where your perceived enemy can turn off the tap and cripple your ability to produce/source batteries.

Key points from the new guidance:

• For context, new 'clean' EVs are eligible for a $7500 discount.
• China has been classified as a foreign entity of concern (FOEC) as expected, in addition to Russia, Iran and North Korea
• Beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured or assembled by a FEOC, and, beginning in 2025, an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a FEOC
• In addition to the FEOC requirement, clean vehicles must also continue to meet additional statutory criteria, including additional sourcing requirements for both the critical minerals and battery components contained in the vehicle, a requirement that vehicles undergo final assembly in North America, and a requirement that vehicles do not exceed a Manufacturers Suggested Retail Price of $80,000 for a van, pickup truck, or sport utility vehicle, or $55,000 for any other vehicle. 
• A company will also be ineligible if it exceeds a 25% FEOC ownership threshold.

For those not playing along at home, the IRA and this guidance is key for the US (and to a lesser extent its allies, Australia included) to establish a battery supply chain external to China, or more broadly FOECs. What does it mean? If anything, it may threaten to slow down the transition away from fossil fuels by cutting vehicles that may qualify for the $7500 discount. On the plus side, it goes a long way for existing and new businesses trying to establish supply chains in the US, a heck of a task. This applies to many companies on the ASX. I am particularly interested in the anode side, but many here have discussed lithium holdings, amongst others.

Link here.