Sen. Joe Manchin (D-WV) is slamming the Treasury Department over what he is calling a “dangerous” interpretation of his and the Democrats’ climate and tax bill that passed earlier this year, urging the department to pause implementation of both commercial and new consumer electric vehicle tax credits.
The Treasury Department released guidance Thursday that said electric vehicles leased by consumers starting Jan. 1 can qualify for up to $7,500 in commercial clean vehicle tax credit and delayed restrictions on which electric vehicles can be eligible for tax credits. The decision makes vehicles assembled outside North America eligible, a major victory for South Korea and other vehicle makers, which were urging the Biden administration to ease requirements in order to boost access to electric vehicles. The Treasury Department said the guidance would not be ready until March. The delay creates a two-month window in which both vehicle makers and consumers can take advantage of tax credits they wouldn’t be able to qualify for in the future.
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The Inflation Reduction Act passed in August and ultimately ended the $7,500 consumer tax credits for electric vehicles assembled outside North America. The law required vehicles to use specific amounts of critical minerals from the United States or countries the U.S. has free trade agreements with, which would increase the creation of battery components in North America. It also disqualified vehicles from credits if they included any minerals made in a “foreign entity of concern.” The electric vehicle would qualify for half the credit if it meets the battery component requirement and the full credit if it meets both. Automakers and industry leaders expressed frustration over the provisions and estimated no existing vehicle would qualify in January if the rules are implemented as initially written.
These provisions were tucked into the bill to entice Manchin’s support for the legislation. Previously, the West Virginia senator raised concerns about the tax credits for electric vehicles and the materials used to build them. The new guidance goes against the wishes of Manchin, who asked the Treasury Department not to allow leased vehicles to qualify for the credits.
Manchin, who chairs the Senate Committee on Energy and Natural Resources, urged the Treasury Department to pause the implementation of electric vehicle tax credits until the guidance is issued in March, saying the department had “bent to the desires of the companies looking for loopholes.” He also said he intends to introduce legislation “that further clarifies the original intent of the law and prevents this dangerous interpretation” from moving forward.
“It only serves to weaken our ability to become a more energy secure nation. It is unthinkable that we still depend on China and Russia for the materials and manufacturing necessary to power our nation in the 21st century and I cannot fathom why the BIden Administration would issue guidelines that would ensure we continue on this path,” Manchin said in a statement.
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The Treasury Department said its latest guidance “reflects months of working through significant complexities and consulting with technical experts across the federal government on battery components and critical minerals.”
