Manchin’s new bill latest snag in EV tax credit rollout

Treasury was required to issue proposed guidance on the sourcing rules by Dec. 31 but missed the statutory deadline. Instead, the department is planning to issue the guidance in March.

After it is issued, the $7,500 tax credit for new EVs, known as 30D, will be parceled out in two halves for qualifying vehicles and buyers. Half is based on meeting escalating requirements for battery components to come from North America. The other half is based on critical minerals coming from the U.S. or free-trade partners.

“Bottom line, it is not unreasonable,” Stabenow said of Treasury’s delay. “They have been given, I believe, an incredibly complicated task to try to figure out how this consumer credit will work.”

Treasury’s delay has potentially opened up more vehicles to qualify for the full credit in the interim. Manchin, however, said allowing vehicles to get the credit without meeting the sourcing rules goes against the law’s congressional intent.

Treasury had no comment in response to Manchin’s bill.

Abigail Wulf, vice president of critical minerals strategy at SAFE, previously known as Securing America’s Future Energy, was quick to remind policy spectators that the stringent sourcing requirements are what got Manchin to reconsider his prior opposition to EV tax credits in the first place and said his latest move is “not surprising.”

“Ensuring critical mineral supply chains for EVs are not overly concentrated or reliant upon strategic competitors that do not share our interests or values is essential for U.S. national security and economic competitiveness,” she said. “This highlights the importance of Treasury moving swiftly to issue clear guidance on the rules to meet the dual purpose of securing supply chains while not lagging behind other countries.”

Nearly 40 new models are potentially eligible for the full tax credit between Jan. 1 and until Treasury issues the required EV battery sourcing guidance, according to an IRS list. However, under Manchin’s bill, eligibility would be significantly limited during that time frame, with very few to no vehicles likely qualifying for the critical minerals portion of the credit.

The Alliance for Automotive Innovation, a trade group that represents the U.S. auto industry, also has said no vehicles would be eligible for the full credit once the EV battery sourcing rules take effect.

“What we should be doing right now is reducing consumer confusion about availability of the tax credits, not adding to it,” John Bozzella, CEO of the alliance, said Thursday during a LinkedIn Live chat with Automotive News.