West Virginia Senator Joe Manchin on Wednesday introduced new legislation that would delay new tax credits for electric vehicles until strict new battery requirements from the Treasury Department are established.
Manchin’s new bill, called the American Vehicle Security Act (AVSA), comes after the Treasury Department in December decided to delay the release of guidelines on the battery requirements to March, yet elected to allow the rest of the program to be implemented at the start of the year.
The EV tax credit is a key inclusion in the Biden administration’s landmark climate law, the Inflation Reduction Act (IRA), and under the IRA, only EVs with battery materials sourced from the US or a country with a free-trade agreement with the US would qualify for the full $7,500 EV tax credit.
The Internal Revenue Service was to submit the guidelines for this credit on December 31st, but has since asked for more time to craft it. In effect, the department has been giving the full tax credit even to EVs that do not meet all the requirements. And it also created a loophole through a separate program for commercial vehicles where some EVs assembled overseas qualify for the tax credit if they are purchased for lease, rental, or for ride-shares.
Manchin, who first urged the Treasury Department to release the guidelines in late December, says that the Treasury Department’s current implementation of the IRA undermines its intent.
“The IRA is first-and-foremost an energy security bill, and the EV tax credits were designed to grow domestic manufacturing and reduce our reliance on foreign supply chains,” Manchin said in a statement. “The IRA and the EV tax credits must be implemented according to the Congressional intent to ensure the United States, as the superpower of the world, is not beholden to countries that don’t share our values.”
Manchin’s bill has no co-sponsor and it’s unlikely that it will receive the support that the IRA did, especially considering that the IRA itself was barely passed, just along the party line and the Democrats have a very slim majority in the Senate.
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