Senator Joe Manchin (D.W.Va.) has criticized the Treasury Department for what he calls a “dangerous” interpretation of the climate and tax bill he and the Democrats passed earlier in the year. He urged the department to stop implementing both new consumer electric vehicle tax credits and commercial credit.
Thursday’s guidance from the Treasury Department stated that electric vehicles leased to consumers beginning January 1 can receive up to $7500 in commercial clean vehicle credit. There are also delayed restrictions regarding which electric vehicles may be eligible for tax credits. This decision allows vehicles made outside North America to be eligible. This is a significant victory for South Korea, and other vehicle manufacturers, who had been urging the Biden administration not to tighten requirements to increase access to electric cars. The Treasury Department stated that the guidance wouldn’t be available until March. This delay gives consumers and vehicle manufacturers two months to take advantage of tax credits that they won’t be eligible for in the future.
Inflation Reduction Act was passed in August. It ended the $7,500 consumer tax credit for electric vehicles made outside North America. This law requires vehicles to use certain amounts of vital minerals from the United States, or countries with which the U.S. has free-trade agreements. This would increase North American battery production. It also prohibited vehicles from credit if they contained any minerals that were made in “foreign entities of concern”. The credit would be split between the half credit for electric vehicles that meet the battery component requirement, and the full credit for those that do not. Industry leaders and automakers expressed dismay at the provisions. They estimated that no vehicle existing in January would be eligible if the rules were implemented as originally written.
These provisions were included in the bill to encourage Manchin’s support. The tax credits for electric cars and the materials that go into them were a concern to the senator from West Virginia. Manchin requested that the Treasury Department refuse to grant credit to leased vehicles.
Manchin, the chair of the Senate Committee on Energy and Natural Resources asked the Treasury Department to suspend the use of electric vehicle tax credits, until March guidance was issued. He said that the department had “bent on the desires of companies looking for loopholes” and that he plans to introduce legislation to “further clarify the original intent and stop this dangerous interpretation from moving forward.”
It only weakens our ability to be more energy-secure. It is absurd that we still depend upon China and Russia for the manufacturing and materials necessary to power our nation in 21st century. I find it hard to believe why the BIden Administration would issue guidelines which would ensure that we continue on this course,” Manchin stated in a statement.
According to the Treasury Department, its most recent guidance was “the result of months of complex work and consultation with technical experts across federal government on critical minerals and battery components.”