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Why Manchin’s bill disqualifying EVs from tax credits is ridiculous


In short, Joe Manchin opposes EV adoption. Straight up. In his latest obstruction against electric vehicles and limiting carbon emissions, the Democratic Senator representing the nation’s second-largest supplier of coal has introduced a new bill that immediately calls for strict enforcement of revised terms for EV tax credits laid out in last year’s Inflation Reduction Act – many of which Manchin wrote himself. We won’t disagree that the government needs guidance to enable these credits, but the senator’s bill is as promising as a future in which we continue relying on fossil fuels.

As you may have noticed from our ever-evolving, yet still murky, breakdown of revised federal EV tax credits that started January 1, 2023, there is a lot up in the air right now when it comes to getting money back from the government for choosing a zero-emissions vehicle.

Just getting those revamped and extended terms to the President’s desk last year was a challenge itself and took specific verbiage from Senator Joe Manchin (D-WV) just to get enough votes. Manchin’s requirements pertained to EV battery materials being sourced in North America or through US free-trade partners, plus battery assemblies relocating stateside as well. That’s a lot more complicated than requiring a certain battery capacity like the credit’s previous iteration, but that was likely the point.

Right out the gate in 2023, these new terms under the IRA immediately disqualified a majority of EVs from qualifying for federal tax credits, particularly from foreign automakers with smaller (or zero) manufacturing footprints in the US. French President Emmanuel Macron was so bold as to confront Manchin at a recent White House dinner to exclaim, “You’re hurting my country.”

Now infamous in Europe, the West Virginia senator visited Davos, Switzerland, to plead his case for the EV tax credit bill and tout his role in ensuring it puts North America first. He went on to tell officials from allies in Germany and France that there is nothing stopping them from bringing production to the US, again reinforcing his nationalism while seemingly trying to avoid a trade war. Bold strategy.

Before the revised terms for EV tax credits kicked in on January 1, the US treasury shared that it would be delaying its battery guidance pertaining to what EV manufacturers need to build in North America for their vehicles to qualify. Although the department was given a deadline of December 2022 to deliver this guidance, it said it needs more time, at least until March 2023.

Without battery guidance, there is no way to enforce the terms pertaining to EV battery materials laid out specifically by Manchin, allowing most EVs that are assembled in North America to once again qualify for up to $7,500 in federal tax credits, at least until March, if and when that battery guidance arrives.

US consumers have been ecstatic, kicking off the new year with a fresh, new EV purchase with the prospect of some money back at the end of the year. One person who is not as ecstatic, however, is Joe Manchin, and he has introduced a bill that will not only tighten up EV tax credits but may require those US consumers who have already bought an EV in 2023 to repay their federal savings.

EV tax credit bill
Senator Joe Manchin / Credit: Joshua Roberts | Reuters

Manchin’s bill blocks all EV tax credits and is a waste of time

Earlier today, Senator Manchin introduced a new bill targeted at federal EV tax credits called “the American Vehicle Security Act of 2023.” The nucleus of the bill is that the federal government shall enforce any and all terms outlined in the signed Inflation Reduction Act, regardless of the US Department of Treasury’s lack of battery guidance. This essentially would disqualify every single EV from federal tax credits. Per Manchin:

The Treasury Department failed to meet the statutory deadline of December 31, 2022, to release guidance for the 30D credit and have created an opportunity to circumvent stringent 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 grow domestic manufacturing and reduce our reliance on foreign supply chains for the critical minerals needed to produce EV batteries… Being an automotive powerhouse is in our blood which is why it is shameful that we rely so heavily on foreign suppliers, particularly China, for the batteries that power our electric vehicles.

Some outlets are reporting that Manchin also expects any US consumers who have already received a tax credit for an EV purchase in 2023 to repay it unless that purchase does, in fact, meet the domestic sourcing requirements in the IRA (spoiler – it likely doesn’t).

Tesla has seen a huge influx of sales in early 2023 after significantly cutting the prices of all four of its available models, but even its battery manufacturing may not yet qualify under Manchin’s ultrastrict conditions.

We understand the nation’s need to bring more EV manufacturing to North America, and it’s a sound investment in the long run, but it will take years for many of these automakers to find land, erect proper facilities, and move their entire supply chains. That includes some American automakers as well who are looking to collaborate with EV battery specialists on local soil.

Manchin’s initial battery requirements that got the IRA signed already felt like a strategic set of verbiage to slow down EV adoption in the US, but this latest bill is simply preposterous. Luckily, it arrives with little priority in the Democratic Senate, currently has zero cosponsors, and is sure to face a peppering of opposition from automakers, especially those operating outside of North America.

What do you think? Is the Senator’s bill justified in stifling virtually all EV tax credits because the US government cannot yet enforce the terms Manchin demands?

Header image credit: Reuters/Kevin Lamarque/File Photo

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