How has Section 45X changed for battery manufacturers?

The One Big Beautiful Bill Act, Public Law 119-21, made three changes to the Section 45X advanced manufacturing production credit that matter to anyone building batteries in the United States.

Prohibited foreign entities, from 4 July 2025

For tax years beginning after enactment, a component is not an eligible component if it involves material assistance from a prohibited foreign entity. Such entities cannot claim the credit themselves either.

This reaches further than ownership. Licensing arrangements, equipment supply and technology agreements can all constitute material assistance, which puts a question over the licensing model several US plants have been built on.

The same-facility and domestic content test, from 1 January 2027

For tax years beginning after 31 December 2026, a taxpayer may treat a primary component as sold to an unrelated person only where three conditions are met together.

The primary component must be produced in the same manufacturing facility as the secondary component it goes into. The secondary component must be sold to an unrelated person. And at least 65 per cent of the total direct material costs of producing that secondary component must be attributable to primary components mined, produced or manufactured in the United States.

That third limb is the one being misread. It is a domestic content test, not merely an integration threshold. A manufacturer can satisfy the same-facility condition perfectly and still fail on where its input materials came from.

It also has a physical consequence. A cathode or anode line sitting in a different plant from the module line no longer qualifies under this route, which pushes toward co-located campuses rather than distributed supply chains.

The critical minerals phase-out, 2031 to 2033

Under pre-OBBBA law there was no phase-out for applicable critical minerals. The credit was open-ended. It now phases out across 2031 to 2033.

Metallurgical coal, newly designated a critical mineral, ends after 2029 and at a reduced rate.

For lithium, graphite, cobalt, nickel and manganese producers, this converts 45X from a permanent feature of the investment case into a closing window. A mine or refinery reaching production in the early 2030s captures a fraction of what one starting today does.

See every other date in the US Battery Compliance Calendar.