Companies may be filing privately with the IRS. They may be building supplier certification chains internally. What matters for anyone sitting across the table from a supplier is that no external verification mechanism exists. The trail visible to procurement teams and tax diligence groups is dark across all three layers at once.
That gap matters now because EV-to-BESS conversion is accelerating, and the companies making the pivot are positioning converted capacity as domestically sourced and compliance-ready.
Why conversion is accelerating now
The 30D clean vehicle credit ceased applying to vehicles acquired after September 30, 2025. That deadline has passed. EV cell demand backed by the credit has contracted. Facilities built or scaled to serve it need volume. BESS is the adjacent market where domestic policy support remains intact.
Credit dependence at the corporate level is traceable, not theoretical. LG Energy Solution's Q2 2026 preliminary results disclosed KRW 241.0 billion in 45X production incentives, down 51% year-over-year from KRW 490.8 billion in Q2 2025 (per LGES's Q2 2025 preliminary results). The company's Q2 operating loss excluding those credits was approximately KRW -127.7 billion, improved from Q1's KRW -397.6 billion ex-credit loss but still negative. The credits are the margin. LGES discloses 45X credits at the corporate North America level, not by facility. Which plant generated which credits, under which product line, is opaque. This is not an LGES-specific problem. It is the norm across every producer I have reviewed, and it is structurally embedded in the compliance architecture described below.
Layer 1. 45X manufacturing credit
What the statute requires. Section 45X grants a production credit for eligible components produced by the taxpayer and sold to an unrelated person during the taxable year. Credit rates: $35/kWh for cells, $10/kWh for modules incorporating cells, $45/kWh for modules not using cells. The operative word is "sold." Internal transfers do not generate a credit unless the taxpayer makes a related-person election requiring a certification filing that identifies buyer, seller, EINs, component types, and intended use.
What the filing requires. Form 7207 (December 2025 instructions) is the vehicle. The instructions require a separate Form 7207 for each facility: facility address, owner identification, technical description, coordinates, aggregate kWh capacity of components produced and sold. Taxpayers electing direct pay under section 6417 or transferability under section 6418 must pre-register each manufacturing facility before filing the return. Contract manufacturing arrangements require a signed certification statement attached to the form.
What is publicly visible. Nothing. By design. Form 7207 is filed with the taxpayer's annual return. Section 6103 makes returns and return information confidential, and "return information" includes taxpayer identity, credits, and data collected by the Secretary with respect to a return. No public registry of 45X claimants exists. No public database of approved facilities exists. The IRS receives facility-level data; the public does not. A company's 45X claims surface only through voluntary disclosure in SEC filings, earnings calls, or investor materials. Every such disclosure I have reviewed is at the corporate or regional level. None is at the facility level.
A procurement team evaluating a supplier's claim that its BESS cells are "45X-eligible" has no external verification mechanism. The claim rests entirely on the supplier's representation.
Layer 2. MACR/PFE substantiation under Notice 2026-15
What the statute requires. Section 45X now excludes an eligible component from the credit if it includes material assistance from a prohibited foreign entity. "Material assistance" is determined through the manufactured-product aggregate cost ratio (MACR) defined in section 7701(a)(52). The MACR measures the share of total direct costs not attributable to PFE-sourced inputs. A component fails if that ratio falls below the applicable threshold. In practice, a cell producer claiming 45X in 2026 must demonstrate that at least 60% of total direct costs are free of PFE sourcing. The threshold tightens annually: 65% in 2027, 70% in 2028, 80% in 2029, 85% thereafter (section 7701(a)(52)).
What the interim guidance requires. IRS Notice 2026-15 (published in Internal Revenue Bulletin 2026-11) provides interim rules for PFE restrictions and MACR calculations under sections 45X, 45Y, and 48E. Taxpayers relying on section 4 interim safe harbors must attach a statement to Form 7207 identifying the specific safe harbor used, the applicable 2023–2025 safe-harbor table if relevant, and how the taxpayer applied it. The statute separately requires supplier certifications signed under penalties of perjury, retained for at least six years by both parties, producible to Treasury on request. Each certification must include the supplier's EIN or equivalent foreign identification number and state total direct material costs for components not produced by a PFE (section 7701(a)(52)). A taxpayer may not rely on a certification it knows or has reason to know is inaccurate.
What is not yet available. The forthcoming safe-harbor tables, due no later than December 31, 2026 per section 7701(a)(52), are supposed to identify the percentage of total direct costs attributable to PFEs for specific components and provide rules needed to determine material assistance. Until those tables publish, taxpayers are operating under interim safe harbors whose relationship to the final methodology is undefined. Notice 2026-15 is explicitly interim: taxpayers may rely on it only until 60 days after proposed regulations are published.
What is publicly visible. No converted BESS facility has publicly disclosed a MACR calculation, a PFE substantiation statement, or a supplier certification chain. The substantiation statement is filed with the annual return, subject to the same section 6103 confidentiality as Form 7207.
For converted facilities, the MACR problem compounds. As I covered in Issue #4, a chemistry switch during conversion resets the constituent-material documentation chain entirely. A facility that was producing NMC cells for EVs and converts to LFP cells for BESS has a different cathode, different precursor suppliers, and a different MACR calculation. Prior documentation does not carry over. The conversion event creates a documentation discontinuity that the interim guidance does not explicitly address. The compliance question is not whether a producer can calculate a MACR. It is whether a producer can calculate a MACR when it just changed every input.
Layer 3. FEOC restrictions across three independent channels
This layer carries the most structural complexity because FEOC restrictions apply through at least three independent channels, each with its own threshold schedule and its own taxpayer.
Channel 1, 45X (producer side). The MACR thresholds described above are the mechanism. The taxpayer is the producer.
Channel 2, 48E (buyer/project side). Section 48E provides the clean electricity investment credit for energy storage technology. It separately excludes energy storage technology whose construction begins after December 31, 2025 if construction includes material assistance from a PFE. The 48E MACR thresholds, also set by section 7701(a)(52), differ from 45X: 55% for construction beginning in 2026, 60% in 2027, 65% in 2028, 70% in 2029, 75% thereafter.
This creates a structural mismatch. A cell that clears the producer's 60% MACR threshold for 45X in 2026 does not automatically clear the project owner's 55% threshold for 48E, because the two provisions are claimed by different taxpayers with different system boundaries. This is my inference from the statutory structure: 45X applies to the eligible component produced and sold, while 48E applies to the qualified facility or energy storage technology placed in service. The 48E calculation encompasses the energy storage technology as a whole, not just the cell as an eligible component. A BESS facility can therefore be 45X-eligible on the producer side while its cells create FEOC exposure for the buyer on the 48E side. As Ronan Adike established in Issue #5, these are separate calculations by separate taxpayers with separate cost bases.
| Year | 45X MACR threshold (producer) | 48E MACR threshold (project owner) |
|---|---|---|
| 2026 | 60% | 55% |
| 2027 | 65% | 60% |
| 2028 | 70% | 65% |
| 2029 | 80% | 70% |
| 2030+ | 85% | 75% |
The thresholds are not aligned. The system boundaries differ. The taxpayers are different entities. Both schedules tighten annually.
Channel 3, IIJA Section 40207 (DOE grant programs). DOE's FEOC interpretive guidance applies to the Battery Materials Processing and Manufacturing grant program under IIJA section 40207. This channel uses a different FEOC definition: an entity qualifies if it is incorporated in, headquartered in, or performing relevant activities in a covered nation (China, Russia, Iran, North Korea), or if a covered-nation government holds at least 25% of voting rights, board seats, or equity interests. DOE's FAQ confirms there is no consolidated list of all entities considered FEOCs under section 40207(a)(5). Each taxpayer must independently assess whether its suppliers qualify.
What is publicly visible across all three channels. No converted BESS facility has publicly disclosed an FEOC compliance determination under any of these channels. No consolidated FEOC entity list exists under any channel. The absence of a list is itself a compliance burden that falls entirely on the individual taxpayer.
Facility-level evidence check
Four facilities illustrate the gap. For each, I checked company press releases, SEC filings where applicable, DOE project pages, earnings transcripts, and economic development disclosures through July 24, 2026. The check is specific: public evidence of facility-level 45X credit claims, MACR/PFE substantiation, or FEOC compliance determinations.
Ford Kentucky. Ford Energy's May 2026 announcement disclosed the Kentucky gigafactory conversion to LFP prismatic BESS, with units planned for availability beginning late 2027. No facility-level compliance disclosure identified in reviewed public sources.
Samsung StarPlus (Kokomo). Samsung SDI's March 2026 release disclosed that StarPlus has been converting production lines from EV to ESS since Q4 2025, with LFP mass production expected from Q4 2026. The DOE conditional commitment page (December 2, 2024) still frames the project as EV cell production for Stellantis. No facility-level compliance disclosure identified. As I reported in Issue #4, StarPlus is converting application, chemistry, and cathode sourcing simultaneously. The evidence trail was thin then. It has not thickened.
Panasonic De Soto (Kansas). Panasonic's April 2026 materials describe a 32 GWh facility producing 2170 cylindrical cells for EVs. Kansas Reflector reported a planned shift of some lines toward data-center battery cells. No facility-level compliance disclosure identified. As of my Issue #6 audit, De Soto was producing but had disclosed neither line-level GWh allocation nor facility-level credit claims.
LGES Lansing (Tesla Megapack). The March 2026 Lansing announcement describes a $4.3 billion Tesla agreement for ESS LFP prismatic cells, with production during 2027–2030. Tesla's Q1 2026 10-Q did not mention LG Energy, Lansing, 45X, MACR, or PFE. No facility-level disclosure identified from either party.
In every case: the absence of public disclosure is recorded as a proof gap, not as evidence of noncompliance. The distinction matters.
Why the gap is structural
The compliance architecture across all three layers shares a consistent design feature: documentation obligations are filed privately, protected by section 6103 confidentiality, and verifiable only by the IRS or DOE. No public registry, certification database, or MACR disclosure requirement exists for any of them. The forthcoming safe-harbor tables may clarify calculation methodology but will not create a public disclosure obligation.
Section 6103 confidentiality does not sunset. The FEOC entity list does not exist and DOE has confirmed as much. The three-layer gap is not a single problem with a single fix — it is three separate opacity structures, each independently shielded from public verification.
Even a hypothetical public 45X registry, which Treasury has not created and shows no indication of creating, would address only Layer 1. Layers 2 and 3 would remain equally opaque, because MACR substantiation and FEOC compliance determinations flow through the same confidential return architecture. The only mechanism that could change visibility is voluntary corporate disclosure. The pattern to date is corporate-level credit aggregation with no facility-level breakout.
The proof ladder framework I published in Issue #5 identified twelve evidence states between "announced" and "contractable." The compliance layers described here occupy the space between rungs 9 and 10: a facility can be producing, customer-shipping, and yield-disclosed, and still be unresolvable for procurement if its compliance filings are undisclosed. A procurement team evaluating a converted BESS facility's claim to be "domestic, compliant, and credit-eligible" is evaluating three layers of supplier representation, each resting on documentation that exists on paper, is filed in private, and cannot be independently verified through any public channel.
That is where the converted BESS market currently sits. Not in noncompliance. In unverifiability.
- MACR safe-harbor tables deadline: Section 7701(a)(52) requires publication of safe-harbor tables identifying PFE cost percentages for specific components no later than December 31, 2026, which will determine whether the interim methodology taxpayers are currently relying on survives or resets.
- Ford Kentucky DOE divergence: The DOE LPO project page still describes BlueOval SK's $9.63 billion loan as financing EV battery production for Ford and Lincoln vehicles, while Ford Energy's successor commercial materials describe BESS output from the same Kentucky asset.
- SK Commerce workforce signal: Georgia's WARN filing lists 958 affected employees at SK Battery America's Commerce site with a May 2026 first separation date, and the company has said it is pursuing BESS customers while maintaining commitment language.
- GM-Samsung New Carlisle pause: WVPE reported that GM confirmed construction of the 27 GWh New Carlisle battery plant would be paused to align capacity with demand, with no disclosed duration, surviving timeline, or chemistry-change decision.