Manchin Wants to Pause Implementation Of New Electric Vehicle Tax Credits

Senate Energy and Natural Resources Committee chair Joe Manchin wants the U.S. Treasury to pause the implementation of commercial and consumer electric vehicle tax credits.

The Treasury issued guidance today that will allow automakers to take advantage of new commercial vehicle tax credits. 

The credits are for consumer leasing that does not have the same strict battery sourcing rules that are in consumer purchase credits aimed at shifting U.S. supply chains away from China. 

Manchin said the Treasury guidance “bends to the desires of the companies looking for loopholes and is clearly inconsistent with the intent of the law. It only serves to weaken our ability to become a more energy-secure nation.”

The Department of Treasury said that electric vehicles leased by consumers beginning on Jan. 1 can qualify for up to $7,500 in commercial clean vehicle tax credits. 

The decision makes cars assembled outside of North America eligible. 

The announcement is a win for South Korea and some automakers that earlier this month sought approval to use the commercial electric vehicle tax credit to boost consumer EV access. Automakers said the credit could be used to reduce leasing prices.

The tax break comes as a part of the massive U.S. Inflation Reduction Act that was passed in August of this year. The $430 billion effort aims to cut Americans’ energy costs, create good jobs and transform U.S. efforts to address the climate crisis. 

The IRA ended $7,500 consumer tax credits for purchases of electric vehicles assembled outside of North America. This angered the European Union, as well as South Korea, Japan, and others. 

The new Treasury guidance does not change the definition of what constitutes North American assembly to make more vehicles eligible for EV purchases.

The Department of Treasury said it was using “longstanding tax principles” to determine whether consumer leasing could qualify for the EV tax credit.

The Treasury Department signaled today some imported cars will qualify for electric-vehicle tax credits in the IRA. 

The move could assuage both European and Asian allies’ concerns about the sweeping climate legislation. 

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