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Manchin Bill Would Pause Tax Credit for EVs Without Guidance

Jan. 25, 2023, 10:00 AM

Sen. Joe Manchin wants to halt new electric-vehicle tax credits that took effect earlier this month until the federal government provides guidance on the incentive.

The chairman of the Energy and Natural Resources Committee will introduce legislation Wednesday that would direct the Treasury Department to stop issuing new tax credits for consumer electric vehicles that don’t comply with specific battery material sourcing requirements under the law. The pause would remain in effect until the department rolls out proposed guidance, now expected in March.

The West Virginian — a key vote for his fellow Democrats on the partisan Inflation Reduction Act (Public Law 117-169) last year — secured stipulations on the tax credit to ensure greater domestic manufacturing and processing of critical minerals for electric-vehicle batteries. Now, he wants to make sure tax credits don’t continue to go out the door until the battery requirements are in place, a Democratic committee aide said during a briefing on his legislation Tuesday.

“The United States of America cannot be relying on foreign supply chains,” Manchin told reporters Tuesday.

The tax, climate, and health law offers a $7,500 credit for people buying electric cars. They can get half the credit if at least 40% of the critical minerals for the car’s battery are extracted and processed in the US or friendly trade partners. Consumers can get the other half of the credit if half the battery materials are sourced within the US or its free-trade partners. The requirement for sourcing the battery materials increases in phases over the next several years under the law.

The government was supposed to issue guidance on the battery requirements before the end of 2022, but the deadline was pushed back. Treasury published a white paper last year outlining the proposed guidance on how it would calculate the critical mineral and battery component values.

Earlier: Treasury Signals Opening for Foreign Carmakers on EV Subsidy (2)

Manchin, in a December statement, urged the department to pause the rollout of the new tax credit on Jan. 1 without clarifying guidance, and vowed to introduce legislation at the start of the new Congress to halt implementation pending guidance.

The legislation, which is narrowly-focused on the EV battery sourcing requirements for the 30D tax credit in the Inflation Reduction Act, wasn’t shared with Treasury or automakers ahead of its introduction, the committee aide said.

With assistance from Samantha Handler

To contact the reporter on this story: Kellie Lunney in Washington at klunney@bloombergindustry.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Robin Meszoly at rmeszoly@bgov.com