House Votes to Limit EV Credit, With Some Democrats Joining GOP

The GOP-led House voted to limit electric vehicle tax credit eligibility requirements embedded in the Democrats’ 2022 tax-and-climate law, recruiting a handful of Democrats in their effort.

The bill, linked to a broader debate over economic reliance and competition with China, passed the House 217-192 Thursday, with seven Democrats in favor.

Republicans said the legislation was necessary to make sure that credits don’t end up benefiting foreign adversaries like China. But Democrats and the White House argued the legislation adds unclear and unworkable restrictions to the tax credit and could discriminate against groups like Chinese Americans.

The White House said it opposes the bill but didn’t go as far as issuing a veto threat. The legislation aims to further constrict the definition of a foreign entity of concern, in hopes of making some companies ineligible for the $7,500 credit.

“Because of the way this bill was poorly drafted, it’s even possible that it could target immigrants who have become US citizens,” said Rep. Judy Chu (D-Calif.).

“The language from this bill comes directly from the US Department of Commerce, it’s nothing new,” Ways and Means Chair Jason Smith (R-Mo.) countered.

Rep. Carol Miller (R-W.Va.), the bill’s sponsor, has criticized the Treasury Department’s rules that gave carmakers an extra two years to shore up sourcing of materials like graphite that are seen as hard to trace to their origin.

The hope of the law was to pry away China’s hold on materials crucial for the batteries needed for the industry. But Miller and even some lawmakers like former Democratic Sen. Joe Manchin (I-W.Va.), who voted in favor of the original law, worry the reprieve could jeopardize energy and national security by allowing products from China, Russia, and Iran to remain in US supply chains.

Miller, with Manchin, also introduced Congressional Review Act resolutions in their respective chambers that would claw back the Treasury rules, along with others, earlier this year. Miller’s version was co-sponsored by Rep. Jared Golden (D-Maine), while Manchin’s Senate legislation has backing from Rust Belt senators, including Democrat Sherrod Brown (D-Ohio), who is in a tight re-election race.

Golden was among the Democrats who voted in favor of the bill Thursday.

Neither chamber has taken up those resolutions to roll back the rules written from the so-called Inflation Reduction Act.

It’s unclear whether the Democratic-led Senate would take up the bill, but it would likely get a chilly reception.