Section 4865 (10 U.S.C. § 4865) does not prohibit FEOC-origin batteries outright. It prohibits them unless three conditions hold simultaneously: final assembly by a non-FEOC entity, more than 95% of functional cell component costs from non-FEOC sources, and production without FEOC-licensed technology. All three conditions must be satisfied independently.
The cost-origin perimeter is statutory. "Functional cell component" means cathode materials, anode materials, separators, anode foils, electrolyte salts, solvents, additives, and internal safety devices — § 4865(e)(3). BMS, pack enclosure, thermal management, and structural hardware are outside the denominator. A domestic pack assembler's value-add does not move the ratio. The 95% test runs at the cell chemistry level, against the cost of the materials that store energy.
The technology-license condition is a separate gate. A cell built from non-FEOC materials using a production process licensed from CATL fails. This requires IP diligence at the production-process level, and no public DoD guidance yet operationalizes how that representation is documented or verified.
The implementing infrastructure does not yet exist publicly. The DFARS revision deadline — 180 days from enactment — passed June 16, 2026. As of this writing, there is no implementing clause, no certification template, and no contracting officer guidance on how the 95% cost basis is calculated. The statute is enacted. The compliance mechanics remain unbuilt.
The three-condition exception — § 4865(c)(1)(A). Fail any one, the battery is non-compliant:
- Final assembly by a non-FEOC entity
- >95% of functional cell component costs from non-FEOC sources
- No FEOC-licensed technology in production
What "functional cell component" includes — § 4865(e)(3): cathode materials, anode materials, separators, anode foils, solvents, additives, electrolyte salts, internal safety devices
What it excludes: BMS, pack enclosure, wiring, thermal management, structural elements — none enter the 95% calculation
Named FEOCs per FY2024 NDAA § 154: CATL, BYD, Envision, EVE, Gotion, Hithium, and successors
Recycling carve-out — § 4865(c)(1)(B): material recycled and reprocessed domestically counts as non-FEOC regardless of original origin
Deadlines — § 4865(b):
- Jan 1, 2028 — new programs (pre-Milestone B)
- Jan 1, 2029 — standard batteries
- Jan 30, 2031 — existing programs
Still missing publicly (as of July 10, 2026): DFARS implementing clause, 95% cost-basis methodology, technology-license certification template, Section 836 compliance repository