The implementation of the FEOC rules exposes the "ambition" of the United States to comprehensively curb the development of China's new energy industry by decoupling China.
Echoing the IRA and FEOC in the United States, South Korea announced the "Plan for Strengthening the Competitiveness of the Battery Recycling Industry" on December 13, providing 38 trillion won (about 29 billion U.S. dollars) in support over the next five years, strengthening cross-departmental coordination, and giving comprehensive support to the battery industry from multiple perspectives such as standards and regulations, financing, upstream minerals, overseas factory construction, battery **, carbon footprint, etc., to comprehensively enhance the competitiveness of the Korean battery industry.
Under such an urgent situation, China needs to take the initiative to comprehensively sort out the industrial chain and come up with strong countermeasuresThe upstream link "restricts going to sea" and jams the other party's throat;Export subsidies are given in the battery sector to hedge against other parties' restrictions. Only in this way can we smash the US IRA strategy and maintain our country's leading position.
On December 1, the U.S. Department of Energy issued the "Sensitive Foreign Entity (FEOC)" rules, which further clarified the definition of FEOC, which made many strict restrictions on Chinese power battery companies.
Overall, China still has an absolute advantage in the upstream of power batteries, and the global battery industry relies on China's upstream materials and equipment, especially lithium iron phosphate cathode and graphite anode have the advantage of rolling type. In the battery sector, China, Japan and South Korea are fiercely competitive, and if they do not advance against the current, they will retreat, and they need to increase their efforts to go to sea to grab the market.
With the implementation of policies in Europe and the United States and the rise of battery companies in Japan and South Korea, if China does not take action, its existing advantages may be quickly eroded, or even overtaken, and the hard-won good situation will be lost
01 The conspiracy of "decoupling China" behind the FEOC rules in the United States
To put it bluntly, the FEOC regulations are aimed at China's power battery industry chain, trying to weaken the competitiveness of China's new energy industry. Considering that the FEOC determination is directly related to the subsidies of car companies, the implementation of the detailed rules has almost completely blocked the possibility of China's new energy industry entering the US market.
In terms of the scope of restrictions, the "Sensitive Foreign Entities (FEOC)" identified this time mainly include four countries: China, Iran, North Korea, and Russia. However, considering that the latter three countries have limited layout in the field of power batteries, and new energy is China's dominant industry, this rule is almost aimed at China.
Not only that, the U.S. FEOC rules also mention that the U.S. Department of Energy has the final determination authority over the FEOC. In this way, the uncertainty and maneuverability in the identification process are greatly increased. The risk coefficient of China's power battery companies has also increased.
And that's not all,The United States' restrictions on Chinese power battery companies may give Japanese and South Korean companies the opportunity to overtake in corners. At present, the battery industry in Japan, South Korea and other countries is heavily dependent on China's raw materials. According to data from the Korea ** Association, in the first half of 2023, the dependence of major cathode materials on China is cobalt sulfate (100%), precursor (97.).4%), graphite and other anode materials are also mostly (90%) from China.
It can be expected that in order to meet the conditions of the US IRA subsidy, domestic upstream ** chain enterprises may cooperate with Japanese and South Korean enterprises to deploy large-scale production capacity in North America or countries with FTAs with the United States, and be controlled by Japan, South Korea or other foreign-funded enterprises. This move will further restrict domestic battery exports, expand the battery industry chain of the US-Japan-South Korea alliance, and help the United States to establish a decoupled China, independent and controllable power battery industry chain strategy, and then weaken the absolute advantage of domestic power battery companies in this field.
Although China still has advantages in the upstream of power batteries, in the long run, with the rise of power battery companies such as Japan and South Korea, China's advantages in the field of new energy may be further eroded, or even surpassed.
02 With the encirclement and suppression of many parties, the advantages of China's new energy industry may "cease to exist".
From the perspective of great power competition, as one of the few industries in China with an overwhelming global advantage, once China's advantage in the field of power batteries is "lost", China will lose an important "weight" in global competition, which will affect China's competitiveness in the international game.
Today, new energy vehicles have become the main battlefield of a new round of global scientific and technological competition. Similar to the chip industry, new energy vehicles are also a trillion-dollar track. According to iiMedia Consulting**, the scale of China's new energy vehicle market is expected to reach 1.15 trillion yuan in 2023 and is still growing rapidly.
Looking at the global market, EV sales in Europe increased by more than 15% in 2022, with more than one in five cars sold being electric. Electric vehicle sales in the U.S. also increased by 55% over the same period. As of May this year, the global penetration rate of new energy vehicles has only exceeded 14%, which means that the growth story of global new energy vehicles has just begun.
As the core link of the industrial chain, the power battery will also benefit from this growth wave for a long time. Because of this, power batteries have also become the top priority of the game in various countries.
From the current point of view, many policy restrictions on localization in the United States are greatly reducing the competitiveness of Chinese power battery companies in the world. According to the "Inflation Reduction Act" (IRA) in the United States, if Chinese power battery companies do not build factories overseas but only rely on exports, they will face 7Additional duty of 5%.
Considering that it is now in the accelerated period of global new energy vehicle market penetration, the United States has introduced restrictive policies on the power battery industry chain at this time, and its intention has been very clear. If China misses this window of rapid growth, the consequences will be unimaginable. In other words,The development of China's power battery industry has reached the "most dangerous" moment.
03 New energy has started a defense war, and it's time for us to fight back
When the competition in the science and technology industry enters the dimension of great power competition, national policy is an indispensable and important measure to promote industrial development and maintain industrial advantages. China's new energy industry urgently needs more policy support from the state
On the one hand, considering that the policies issued by the United States cover the whole industrial chain of mineral development, smelting, key materials, components, batteries, and electric vehicles, the main purpose is to suppress China's first-class chain in the field of new energy vehicles and batteries, and develop the first-class chain outside China.
In this caseThe competent authorities need to consider the competitive advantages of the whole industry chain more as a whole, especially focusing on the trend of accelerating the establishment of joint ventures in the United States or other overseas markets in the upstream of the first chain, so as to avoid the upstream swarming to go out and cooperate with the US policy and help the US strategy fail
On the other hand,In order to offset the impact of the U.S. Inflation Reduction Act, relevant departments may take the lead in introducing industrial subsidy policies, increase subsidies for battery exports, hedge the impact of IRAs, and reverse the unfavorable situation
In fact, this approach is also the EU's response to the US Inflation Reduction Act. For example, the European Union has introduced a series of targeted laws, including the Net-Zero Industry Act, which accelerates the green transformation of industry, and seeks to increase the local manufacturing capacity of net-zero strategic technologies and their key componentsThe Critical Raw Materials Act was proposed to promote the establishment of a sustainable and competitive critical raw materials value chain in Europe and reduce the dependence of strategic raw materials on third countries.
At the same time, EU member states are accelerating similar initiatives. France's Ministry of Ecological Transition and other departments have released a proposal for the "Electric Vehicle Subsidy Reform", which will determine the eligibility of subsidies based on the carbon emissions generated during the manufacturing of electric vehicles, and provide subsidies for locally produced electric vehicles.
Jumping out of the new energy industry,From a longer-term perspective, in the narrative of the great power game, it is important to launch an attack on the cutting-edge technology industry, but in the face of other countries, it may be more important, more challenging and urgent to defend its own advantageous industries.