FEOC Stack

Problem solved

OEMs, battery cell makers, and IRA-monetizing investors need a defensible, vehicle-by-vehicle answer to a single Treasury question: what fraction of the applicable critical minerals and battery components in this BoM is FEOC-clean under the December 2024 final rule, and where are the remaining vulnerabilities.

Inputs

• Bill of materials at battery-cell, module, and pack level (mass and value share)
• Cathode active material chemistry split (NMC, NCA, LFP, sodium-ion)
• Extraction, processing, and recycling chain for each applicable critical mineral
• Counterparty ownership and control disclosures (board seats, equity, license rights)
• Country of incorporation and ultimate parent for each tier in the chain
• Recycled content share and recycler jurisdiction
• Constructive knowledge documentation: invoices, certificates of origin, attestations

Outputs

• Percent of applicable critical minerals value FEOC-clean (50 percent threshold for 2025, 60 percent for 2026)
• Percent of battery components manufactured or assembled by a non-FEOC entity (60 percent for 2024, 100 percent post 2025)
• Vehicle-level pass or fail under Section 30D for each model year
• Vulnerability map naming each FEOC-tagged node and its share of the deficit
• Mitigation route table: requalified suppliers, recycled-content swaps, processing relocations
• 25 percent ownership and 25 percent board threshold flags by counterparty
• Audit-ready replication package suitable for IRS Form 15400 reconciliation

Method

1. Step 1. Lock the BoM at part-number granularity. Reconcile to engineering BoM and to financial BoM, then resolve the delta. Multi-source parts get a weighted blend by procurement plan.
2. Step 2. Map each applicable critical mineral (lithium, cobalt, nickel, graphite, manganese, others under 30D guidance) through extraction, processing, and recycling. Each node gets a country, a parent entity, and an ownership chain.
3. Step 3. Classify each node against the December 2024 final FEOC rule. Flag any entity that is owned by, controlled by, or subject to the jurisdiction of a covered nation (PRC, Russia, Iran, North Korea), including the 25 percent board, voting interest, and equity tests.
4. Step 4. Compute the value-add at each step (extraction, processing, recycling) using current-period commodity benchmarks (Fastmarkets, Benchmark Mineral Intelligence) and BLS PPI for processing margins. Apply the 50-then-60 percent value threshold for the model year.
5. Step 5. Apply the components rule separately. Identify the manufacturer or assembler of each battery component (cathode, anode, separator, electrolyte, cells, modules, packs) and check the 60-then-100 percent non-FEOC share.
6. Step 6. Tag any constructive-knowledge gaps where FEOC status cannot be confirmed. Treat unknowns as failing under the conservative interpretation, then flag a remediation route.
7. Step 7. Run the mitigation table. For each failing node, score requalification cost, recycled-content swap value, and processing relocation timeline against the IRA 30D credit retention math.
8. Step 8. Assemble the audit replication package. Every percentage in the deliverable is reproducible from the same BoM and counterparty disclosures, with named source links and Treasury rule citations.

Assumptions

• Treasury final rule of December 2024 governs interpretation. Subsequent guidance modifications are tracked but require a re-run.
• Value-share weighting uses current-period commodity benchmarks. Forward-curve sensitivity is reported as a separate scenario.
• Recycled content qualifies as non-FEOC when the recycler is non-FEOC and constructive knowledge documentation supports the chain of custody.
• Multi-source parts use the procurement plan weights. Sole-source parts inherit the single supplier classification.
• Constructive-knowledge gaps default to fail. Each gap carries a documentation cost estimate.

Limitations

• The framework cannot resolve an undisclosed ownership chain. If the counterparty refuses or cannot produce parent-entity disclosure, the node is flagged unknown and treated as failing.
• FEOC interpretation is litigation-exposed. The framework reports the conservative reading; the optimistic reading is run as a sensitivity case but should not anchor a credit claim.
• Mineral-by-mineral price weights are sensitive to benchmark choice. A 200 dollar per kg shift in cobalt can move a borderline vehicle past or below threshold.
• Recycled-content qualification depends on documentation depth that few recyclers currently maintain. The mitigation route will often be slower than the base case suggests.

Example application

Applied to a Vietnamese EV battery cluster scenario: VinFast pack assembly in Hai Phong, Gotion High-tech cell supply, and a rare-earth restart at Dong Pao. The FEOC Stack walked the cathode chemistry through Indonesian nickel and Australian lithium, then mapped Gotion ownership against the 25 percent threshold, then scored the Dong Pao restart against the applicable critical minerals list. The brief reports the resulting Section 30D pass/fail by model year and names the three remediation routes that would close the deficit. See Vietnam EV battery cluster: IRA hedge or false dawn.