Newsletter summary
Us Department of Energy releases final draft of FEOC definitionApplearcadefree3monthsElectrification relies on the Chinese supply chain in the short term. IRA subsidy rules are updated to benefit Chinese lithium power enterprises, Ningde era and so on. It is suggested that we should pay attention to the relevant leading enterprises, new energy vehicle sales and overseas policy risks.
Text of news flash
[the U.S. Treasury Department announced a temporary exemption for graphite and other key minerals.] on May 3, the U.S. Department of Energy released final details on the definition of "sensitive foreign entity" (FEOC). The US Treasury has temporarily exempted graphite and other key minerals from FEOC regulations.
The US government's decision reflects the relaxation of tax credits for electric vehicles, which still receive IRA subsidies of up to $7500 for electric vehicles allowed to use Chinese graphite by the end of 2026. Previously, the US government issued the FEOC rules to establish the domestic battery industry chain and accelerate the electrification process. However, the Chinese industry chain still plays a key role in the supply of battery materials such as graphite negative electrode. Chinese companies occupy an important position in the global electric vehicle battery market, dominating the production and processing of key minerals such as lithium and graphite.
With the update of the details of the US IRA Act, the layout of domestic lithium enterprises in the US market is expected to accelerate. The cooperation mode of technology authorization between Ningde era and Ford Motor Company provides a new opportunity for the North American production capacity layout of domestic lithium power enterprises. In the long run, the technology licensing model is expected to become a breakthrough for Chinese lithium enterprises to expand in the United States.
When paying attention to the inflection point of supply and demand in the lithium power industry chain, investors should pay attention to the improvement of the capacity utilization of new energy vehicles and the promoting effect of the trade-in policy on the demand of new energy vehicles. The accelerated development of the new energy vehicle industry in the United States is expected to lead to the improvement of capacity utilization of related enterprises.
Investors are advised to pay attention to the following companies: 1) Ningde era, Shangtai Science and Technology, Kodali, Hunan Yuneng, Zhongwei shares, and Divine Materials, which occupy a leading position in the industry; 2) Yinghe Technology and Zhenyu Technology, which have the potential to reverse their difficulties. At the same time, investors should pay attention to the lower-than-expected sales of new energy vehicles, the lower-than-expected demand for energy storage and overseas policy risks.
