Even so, how Treasury decides to define and enforce the law’s foreign entity of concern provision “will make or break the national security benefits,” said Robbie Diamond, CEO of SAFE, a Washington-based energy security organization.
How strictly Treasury decides to implement the provision also could be a “red light” to broader vehicle eligibility, said Boylan, noting that the department might choose to lean on a proposed definition in the CHIPS and Science Act.
Under that definition, a foreign entity of concern could include any person or company “who directly or indirectly through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests” of a partnership, corporation or foreign political party, among other examples.
“How much exposure is concerning to Treasury?” Boylan asked.
While that’s still being determined, some analysts are predicting more EV sales leading up to the stringent sourcing rules taking effect.
“Very short term, I think that we’ll see a little bit of a rush ahead of April 18,” said Ben Kallo, senior research analyst at Baird. “Longer term, this is going to be a boost to the overall industry.”
Others, including Alvarez & Marsal’s Brian Irwin, aren’t as optimistic.
“The number of vehicles qualifying will drop on the 18th from where we are today,” said Irwin, who leads the consulting firm’s automotive sector team.
“The more pragmatic question,” he said, “is how is that helpful to drive EV adoption?”