Manchin writes bill to stop temporary electric vehicle tax credits

Manchin writes bill to stop temporary electric vehicle tax credits

Increase / “The IRA and the EV tax credits must be implemented in accordance with the resolution of Congress to ensure that the United States, as the world’s superpower, is not seen by countries that do not share our values,” said Senator Joe Manchin in a statement sent to Ars.

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Senator Joe Manchin (DW.Va.) is not impressed with the temporary leniency shown to electric vehicles in terms of the federal tax credit, and he is determined to do something about it. On Wednesday the Senator introduced a new bill, “the American Vehicle Safety Act of 2023.” The bill would immediately implement the much stricter new tax credit rules contained in last year’s Inflation Reduction Act, although the Treasury Department has not finished working out how to do that. If Manchin’s bill were to pass, it’s unlikely any EVs would qualify.

“It is unacceptable that the US Treasury has failed to issue updated guidance for the 30D electric vehicle tax credits and continues to provide the full $7,500 credits without meeting all of the clear requirements contained in the Inflation Reduction Act, ” Manchin said in a statement sent to Ars.

That’s not all. According to several outlets, the Senator is asking anyone who may have received an EV tax credit in 2023 to have to repay it, unless they can prove the car met the home source requirements . And that could be expensive news for anyone who rushed out to buy a new Tesla after that company slashed prices to allow more of its EVs to qualify for the new tax credit rules.

Where did you get this lithium?

The Inflation Reduction Act last year changed the way a vehicle qualifies for a tax credit, which remains at a maximum of $7,500. Previously, the amount was tied to the battery’s capacity, but Manchin — known to oppose EV tax credits — wrote new language that tied the credit to the battery pack’s content. To qualify, an increasing share of the minerals must come from the US or a country with which we have a free trade agreement. The same applies to an increasing share of the value of the package that came from the US or a free trade partner.

Perhaps by design, this would likely make all EVs for sale ineligible, at least until many new US battery factories come online in the coming years – we won’t know that certainly until the Treasury Department publishes its guidance in a few. of months.

In December the Exchequer said they would have that guidance ready by March; until then, it’s just about enforcing the other requirements, such as the final assembly of the vehicle taking place in North America, detailed in this Ars Technica explanation.

When I wrote that guide a few weeks ago, I knew it needed to be updated. But I didn’t expect it to be so soon.

According to Manchin,

The Treasury Department failed to meet the statutory deadline of December 31, 2022, to release guidance for the 30D credit and created an opportunity to circumvent the supply chain requirements included in the IRA. The IRA is first and foremost an energy security bill, and the EV tax credits were designed to increase domestic manufacturing and reduce our dependence on foreign supply chains for the critical minerals needed to produce EV batteries.. .our blood and that is why it is shameful that we are so dependent on foreign suppliers, especially China, for the batteries that power our electric vehicles.

However, the situation may not be as dire as it seems. Last year’s Inflation Reduction Act was considered legislation passed by the Democratic majority, which gave Manchin considerable leverage because of the party’s small Senate majority. In contrast, this new bill has no such priority, has no co-sponsors, and is sure to be the subject of bogus lobbying on behalf of the auto industry.

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