Manchin rages against attempts to broaden EV tax credit

Senator Joe Manchin is pushing back against efforts to apply broad interpretations to a tax credit for electric vehicles that he largely wrote. 

The fight came to head Thursday when Manchin, a West Virginia Democrat, failed to win quick passage of a Senate bill that would halt the credits, worth as much as $7,500, until implementation rules are finalized for the Inflation Reduction Act, which passed last year after he weighed in heavily on it.

The legislation, known as the IRA, has been hailed as a major piece of industrial and climate policy, with about $500 billion in spending and tax breaks including for EVs and renewable energy. 

However, hammering out how to implement the law has ruffled the Made-in-America goal Manchin and other supporters aimed for, which had angered trade partners in Asia and Europe. 

The bill also intends to cut reliance on key battery materials from overseas, particularly China, which has frustrated carmakers struggling to shift their supply chains quickly.

Manchin accused the U.S Treasury Department on Thursday of slow-walking the regulations in a bid to allow carmakers to take advantages of loopholes in the legislation to offer more EV tax credits than he said it intended. 

The Treasury department had said at the end of December, when it was originally required to finalize the rules, that it’s aiming for a March release given the complexity of the issue. It had no comment Thursday on Manchin’s new legislation. 

‘Plenty of Time’

“They don’t have the guidance ready and they had plenty of time to do it,” Manchin said. “But they are now continuing to let the $7,500 credit go without any concerns at all about the critical mineral requirements. That’s just not what the legislation is about. It’s not what we all voted for.”

Senator Debbie Stabenow, a Democrat from Michigan, the traditional home of America’s auto industry, objected to Manchin’s effort Thursday to pass his new bill unanimously, saying the IRA’s EV tax rules are “confusing” and “not well vetted.”

“It is not supported by anyone in the industry who believes that they have the capacity — immediately, right this minute — to meet the complicated formulas,” Stabenow said.

Starting at the beginning of the year, the Inflation Reduction Act required EVs qualifying for the tax credit to be built with a certain value of their minerals extracted or processed in the US, or a country that has a free-trade agreement with the US. 

It also requires that the battery includes a certain percentage of components that were manufactured or assembled in North America.

After complaints by some Asian and European manufacturers over the content requirements, the White House is considering new trade agreements with certain countries that would open the door to some of the benefits in the IRA, people familiar with the issue said this week.