US Senator Joe Manchin and CEO of Enel Francesco Starace, from right, speak on the podium at the World Economic Forum in Davos, Switzerland Thursday, Jan. 19, 2023. The annual meeting of the World Economic Forum is taking place in Davos from Jan. 16 until Jan. 20, 2023. (AP Photo/Markus Schreiber) Markus Schreiber/AP

Manchin slams Treasury for ‘freewheeling’ with electric vehicle subsidies

Jeremy Beaman January 31, 04:26 PMJanuary 31, 04:26 PM Video Embed

Sen. Joe Manchin (D-WV) criticized the Treasury Department for “freewheeling” on the Inflation Reduction Act’s revamped electric vehicle tax credits by enforcing income limits and other conditions but not new battery manufacturing requirements.

Manchin, whose negotiations with Democratic leadership shaped the $369 billion Democratic healthcare and energy spending bill passed in August, has been locked in a fight with Treasury over its implementation of new conditions he demanded be included for the consumer clean vehicle tax credit.

MANCHIN PROPOSES BILL TO OVERRIDE TREASURY ON ELECTRIC VEHICLE SUBSIDY RULES

The Energy and Natural Resources chairman took issue Tuesday with a notice the department issued in December saying that income limitations restricting household receipts of the tax credit, as well as purchase price limitations, are in effect while the new battery requirements are not.

“If you can’t write your rules and regulations, but you can pick and choose what you like in the bill, that means you don’t want to enforce the bill the way it was written,” Manchin said on the Senate floor.

“That’s what we should not tolerate,” he said. “That’s not what anybody in this body should ever tolerate, to let the agencies do exactly what they think they want to do to appease whoever they’re trying to appease versus what we pass and the intent of what we passed.”

Treasury is currently drawing up guidance for the new law’s battery requirements, which must be met for a vehicle to be eligible for the credit, after missing a Dec. 31 deadline to finalize guidance.

The battery requirements do not apply until its guidance is finalized, the department said in December, effectively dispensing manufacturers from having to meet the requirements. Treasury is eyeing March to finalize guidance.

The new law requires that, beginning this year, electric models purchased for consumer use may only be eligible for a full $7,500 tax credit if the vehicle is assembled in North America and meets two other conditions: at least 40% of the critical minerals used in its battery are sourced from the U.S. or a country with which the U.S. has a free trade agreement, and at least half of the battery’s components are manufactured in North America.

These percentages increase in the following years.

Treasury has been under immense pressure from trade partners in Europe and Asia who said the subsidies terms would disadvantage them. The EU and its national governments, such as France and Germany, as well as South Korea and Japan, have been lobbying the administration to ease up on the requirements.

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Manchin, who opposed earlier attempts to subsidize EVs without domestic manufacturing requirements, criticized the department in December for not issuing the guidance and recently introduced legislation to prohibit the Treasury from issuing new consumer vehicle tax credits for clean vehicles that do not meet the law’s battery and battery material sourcing requirements.

Manchin said Tuesday his bill is meant to hold accountable Treasury “and every other agency that think that they can freewheel and just make up what they want … rather than implementing the law.”

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