Manchin seeks to delay EV tax credits so they can follow the law

Senator Joe Manchin introduced legislation this week to delay the federal EV tax credit, claiming the Treasury Department has not complied with recently enacted rules.

The federal tax credit of up to $7,500 for eligible vehicles was raised again under the Inflation Reduction Act (IRA) passed last year, but with additional requirements including that EVs and their battery packs be assembled in North America. I got

Volkswagen ID.4 built in Chattanooga

The Treasury deferred full guidance on the battery component of the regulation to March, but allowed the remainder of the program to go into effect on January 1. Full credit can be claimed if passed by an IRA.

That’s why Manchin wants the Treasury Department to stop issuing tax credits for foreign-assembled battery packs and vehicles with minerals sourced outside the US’s normal trade area. In a press release, he described the IRA as “first and foremost an energy security bill” that would protect domestic supply chains and ensure that the United States “doesn’t benefit from countries that don’t share our values.” He said the EV tax credit is necessary for

2022 Volt EV Assembly - Battery Marriage

2022 Volt EV Assembly – Battery Marriage

Apart from this, the new regulations will also require dramatically different reports from automakers and distributors, including new metrics and data streams that some companies did not previously have, so they can prove compliance. It only makes things more complicated.

But for now, almost all EVs have other ways to get tax credits. The IRA created a tax loophole in the 45W related to commercial vehicles, allowing leased passenger vehicles (even imports) to claim government money if there is a captive leasing department issuing the leases.

Some brands, such as Lucid, are already using it to obtain luxury vehicle credits above the price cap set by the IRA. And it looks like federally subsidized foreign luxury EV leasing could soon become a reality.

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