Why Are Chinese NEVs Gaining Attention in Southeast Asia?
In 2024, global sales of electric cars exceeded 17 million for the first time, marking a 26% year-on-year growth. Chinese new energy vehicles (NEVs) have emerged as a major driving force for global growth, accounting for over 70% of shares in the international market. In recent years, Chinese automakers like SGMW are accelerating in cultivating new quality productive forces. They have established "China model" for high-quality development of the NEV industry.
What is the research and production process behind Chinese-made NEVs? What innovative manufacturing secrets lie inside the auto factories? Why could China achieve a leap-forward development in the NEV sector, topping the global list in NEV output and sales?
In a conversation with front-line workers and technical experts at SGMW's factory, CICG's Thai host Zhang Ailing finds out the answer.
Why Are Chinese NEVs Gaining Attention in Southeast Asia?https://youtu.be/2JrIslh__-M
View original content to download multimedia:https://www.prnewswire.com/apac/news-releases/why-are-chinese-nevs-gaining-attention-in-southeast-asia-302474064.html
SOURCE China.org.cn
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[12] A separate grandfathering rule, the binding contract exception, applies to any facility using products or components acquired under a written agreement executed before June 16, 2025, provided that the facility begins construction before August 1, 2025, and is placed in service by January 1, 2030 (or, for some solar and wind facilities, January 1, 2028). In those cases, the costs covered by the contract are excluded from the MACR entirely. To enforce these requirements, the statute allows the IRS to assess any deficiency tied to an incorrect MACR calculation for up to six years after a return is filed. If a taxpayer overstates the MACR and receives a disallowed credit, a 20% accuracy-related penalty may apply. In the case of direct pay for applicable entities under § 6417, the disallowed credit triggers an excessive payment penalty of 20%. 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Guidance: Manufacturers should accelerate production of wind components before the end of 2027 to capture remaining credits and reassess assembly strategies that rely on integration elections. Firms in the critical minerals sector must plan extraction or processing activities to occur before 2034 or qualify projects ahead of accelerated phase outs. Given the new foreign entity bar, clients need to strengthen supplier due diligence processes—tracking key inputs to ensure no impermissible material assistance—and maintain documentation proving domestic origin. Finally, companies should evaluate whether credit transfers remain the optimal monetization route or if reshaping operations to fully absorb credits in house yields better after tax returns. Clean Hydrogen Production Credit (§ 45V) Overview: Qualified clean hydrogen produced by the taxpayer is eligible for a per kilogram credit percentage of $0.60 that ranges from 20% to 100% depending on the lifecycle greenhouse gas emissions rate that occurs in the process. The credit applies to the hydrogen produced during the ten-year period that the facility is placed in service. Enacted Changes: Facilities that commence construction after December 31, 2027, would no longer be eligible for any § 45V credit. No new FEOC rules would apply to § 45V. Guidance: Project developers should prioritize breaking ground on or before December 31, 2027, to preserve § 45V eligibility and avoid forfeiting the credit entirely. They must also optimize production processes and feedstock choices to qualify for the lowest emission tier and secure the maximum per kilogram rate. Early planning for credit transfers will help monetize benefits if on site tax capacity is insufficient. 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Clients that produce fuel made from foreign feedstocks should evaluate costs and look to potential domestic feedstocks as a cost-alternative option in production. Carbon Oxide Sequestration Credit (§ 45Q) Overview: 45Q provides a federal tax incentive for projects that capture carbon dioxide or carbon monoxide emissions and either permanently store them in secure geological formations or utilize them in specific commercial applications such as enhanced oil recovery or chemical production. The credit is designed to encourage decarbonization across heavy industry and power generation by reducing the effective cost of deploying carbon capture, utilization, and storage technology. Eligibility generally hinges on placing qualified capture equipment in service and beginning construction by a statutory deadline. Once in operation, eligible facilities can claim the credit for a 12-year period. The amount of the credit per metric ton varies depending on whether the carbon is permanently sequestered or utilized and can be significantly increased for projects that comply with prevailing wage and apprenticeship standards. Enacted Changes: OBBBA simplifies the credit structure by equalizing the rates for sequestration and utilization for qualified facilities placed in service after a certain date, with the base and enhanced rates fixed across project types. The base rate is now $17 per metric ton of carbon and the rate for qualified facilities placed in service after 2022 is $36. Additionally, the legislation imposes foreign-entity restrictions to prevent credits from flowing to entities tied to certain adversarial governments. Specifically, SFEs become ineligible for the credit in tax years beginning after OBBBA's enactment. Foreign-influenced entities FIEs, including those with material ownership or control links to SFEs, lose eligibility two years later. 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OBBBA would resurrect that incentive through the end of 2026 and increase the subsidy from ten cents to twenty cents per gallon. While this maintains transferability in principle, clients should note that the overall value of these elections may be diminished by the accelerated phase outs and placed in service deadlines embedded elsewhere in OBBBA. Moreover, OBBBA additional foreign entity restrictions onto §§ 45Y, 48E, and 45X, rules that do not extend to credits under §§ 45U, 45Q, 45Z, or the broader § 48 investment credits, further complicating structuring for affected taxpayers. Penalties Taxpayers who choose to avail themselves of the energy tax credits must be diligent in ensuring compliance with the requirements and restrictions of the sought-after credits. Noncompliance may be accompanied by strict penalties. Taxpayers who understate income by 1% or more due to disallowed energy credits (§§45X, 45Y, or 48E) are hit with a penalty equal to 20% of the understatement under a change to § 6662. Credits disallowed due to FEOC or foreign-sourcing restrictions may contribute to a taxpayer's understatement, so it is critical that clients are diligent in ensuring compliance through their supply chains. Misstatements on certifications made by suppliers regarding domestic content or foreign sourcing after 2025 will be subject to a penalty that is the greater of $5,000 or 10% of credit amount claimed by the taxpayer relying on the misstated certification. Questions? Let's talk If you have questions about how OBBBA may impact your renewable energy projects, tax credit eligibility, or compliance obligations, please don't hesitate to reach out. Frost Brown Todd's Renewable Energy Team is here to help you navigate the new landscape. Contact Brian Zoeller Greg Dutton Raghav Agnihotri Chris Coffman Brian Masterson We're closely monitoring Treasury Department guidance and executive orders relevant to renewable energy tax projects and can assist you with structuring, due diligence, and credit monetization strategies tailored to your needs. Frost Brown Todd is a national law firm serving some of America's top corporations and emerging companies. With attorneys regularly identified by clients, peers and industry organizations as leaders in their practice areas, the firm advises and protects clients in business transactions and litigation in many industries, including insurance, financial services, manufacturing, real estate, construction, technology, energy and health care. The firm's more than 600 attorneys in offices across California, Colorado, Indiana, Kentucky, Ohio, Pennsylvania, Tennessee, Texas, Washington, D.C., and West Virginia provide unparalleled service to meet clients' needs; deliver the insights and solutions available only from a diverse group of professionals; and support the communities in which they operate. [1] The following credits are subject to varying foreign entity restrictions: the Zero-Emission Nuclear Power Production Credit (§45U), the Clean Electricity Production Credit (§45Y), the Clean Electricity Investment Credit (§48E), the Advanced Manufacturing Production Credit (§45X), the Clean Fuel Production Credit (§45Z), and the Carbon Oxide Sequestration Credit (§45Q). [2] Foreign Terrorist Organizations, U.S. Dep't of State, Foreign Terrorist Organizations – United States Department of State, (last visited July 3, 2025 [3] Specially Designated Nationals List, OFAC Sanctions List Service, OFAC Specially Designated Nationals List – Sanctions List Service, (last visited July 3, 2025). [4] E.g., Espionage Act, 18 U.S.C. §§ 792–799; Agents of Foreign Governments, 18 U.S.C. § 951; Major Fraud Against the United States, 18 U.S.C. § 1031. For a complete list, see 15 U.S.C. § 4651(8)(D). [5] William M (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No. 116–283 § 1260H, 134 Stat. 3388. For a list of entities identified as Chinese military companies operating in the United States, see Entities Identified as Chinese Military Companies Operating in the United States. [6] Pub. L. No. 117–78 § 2(d)(2)(B)(i), (ii), (iv), or (v), 135 Stat. 1527. [7] Listed in the National Defense Authorization Act for Fiscal Year 2024 § 154(b)(1) – (7) on page 47. E.g., CATL, BYD Company, Envision Energy. [8] A foreign controlled entity includes the government of a covered nation (North Korea, China, Russia, and Iran), an agency or instrumentality of a covered nation, a person who is a citizen or national of a covered nation, an entity or business unit incorporated or organized or having its principal place of business in a covered nation, or any entity 'controlled' by those described in this parenthetical) (where 'control' = 50 percent vote or value of stock of corporation or 50 percent capital interest or beneficial interests). Publicly traded entities are excluded from this restriction except to the extent that (i) any exchange or market which is incorporated or organized under the laws of a covered nation or has its principal place of business in a covered nation, or (ii) 1 or more specified foreign entities or foreign-controlled entities controls more than 50%. [9] The MACR thresholds vary by technology and start‐of‐construction date. For example, qualified facilities under §§ 45Y & 48E must meet 40 percent in 2026, rising to 60 percent for projects starting after 2029; energy storage thresholds begin at 55 percent in 2026 and climb to 75 percent post 2029; solar component sales require 50 percent in 2026 up to 85 percent after 2029; and similar step ups apply to wind, inverters, batteries, and critical minerals. [10] Until the tables are issued, taxpayers may use the domestic content cost tables in IRS Notice 2025-08 and rely on supplier certifications. 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