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Manchin is pushing to delay tax credits for electric vehicles

WASHINGTON (AP) – Democratic Sen. Joe Manchin stepped up his criticism and decided Wednesday to delay new tax credits for electric vehiclesa key feature of President Joe Biden’s landmark climate change law.

Manchin said guidelines issued by the Treasury Department allow manufacturers in Europe and other countries to circumvent requirements that significant parts of EV batteries be produced in North America.

The Climate Act, officially known as the Inflation Reduction Act“is first and foremost an energy security bill,” Manchin said, adding that the tax credit for electric cars should “grow domestic production and reduce our dependence on foreign supply chains for the critical minerals needed to produce electric car batteries.”

Manchin’s attempt to delay the tax credits came as Energy Secretary Jennifer Granholm and White House climate adviser Ali Zaidi visited the Washington, DC, Auto Show on Wednesday to highlight the administration’s efforts to boost electric vehicles and related infrastructure.

Sales of electric cars have tripled since Biden, a Democrat, took office two years ago, Granholm said. There are now more than 2 million electric cars and 100,000 chargers on American roads, with more than $100 billion invested or pledged for electric cars and their supply chains, including batteries, she said.

While batteries and components have long been manufactured in China, “we’re going to bring that production home,” Granholm told reporters.

“We want to give Americans the chance to drive American vehicles made by American workers — and that’s only going to get worse as Americans start driving these vehicles and realize how great they are,” she said. “Demand will be very high. We expect that by 2030, half of all vehicles sold in the United States will be electric.”

Granholm and the White House declined to comment on Manchin’s bill, but the measure from the West Virginia lawmaker is unlikely to gain traction in the Senate, where Democrats hold a slim majority and have shown no inclination to reopen a bill they just passed on a party line -line voting. During the midterm election campaign, Republicans criticized Biden and other Democrats to support electric vehicles, citing their relatively high cost and batteries made in China.

Tax deduction of up to $7,500 per vehicle is intended to spur EV sales and domestic production of vehicles and batteries while reducing planet-warming greenhouse gas emissions. European and Asian allies, including French President Emmanuel Macron, have criticized the rules as unfair to foreign manufacturers.

While Macron applauded Biden’s efforts to curb climate change, he said during a visit to Washington that subsidies in the new law could be a huge problem for European companies.

Biden acknowledged “flaws” in the legislation but said “there are tweaks we can make” to satisfy allies.

Manchin’s bill follows a decision by the Treasury Department to delay the rules on battery content and minerals until March, while allowing the rest of the program to be implemented on January 1. The Manchin bill directs the Treasury Department to stop issuing tax credits for vehicles that do not comply with battery requirements.

“The United States is the birthplace of Henry Ford, who revolutionized the auto industry,” Manchin said, calling it “shameful that we are so dependent on foreign suppliers, especially China, for the batteries that power our electric vehicles.”

Manchin, chairman of the Senate Energy and Natural Resources Committee, was the deciding vote in passing the climate change bill, which passed without the support of any Republicans in the House or Senate. He has said that exemptions approved by the Treasury Department — including one that allows tax credits for electric cars purchased for commercial use, such as leasing or carpooling, even if they are foreign-made — undermine the law’s intent to reduce America’s dependence on foreign countries. including opponents, and create jobs in the United States.

At the World Economic Forum in Davos, Switzerland, last week, Manchin said he was unaware that the European Union does not have a free trade agreement with the United States when Democrats passed the EV restrictions. He told reporters at the Capitol this week that European countries should rethink their own policies to promote clean energy and the United States could work on a trade deal.

“Whether I realized it or not, hopefully they’re going to get it together and let’s have a free trade agreement,” Manchin said.

Senate Finance Committee Chairman Ron Wyden, D-Ore., has said he has no interest in reopening the climate change law, which passed after more than a year and a half of sometimes contentious negotiations.

John Bozzella, president of the Alliance for Automotive Innovation, an industry trade group, said Manchin’s bill would only add confusion to an already complicated tax credit for electric cars that many drivers — and even some car dealers — don’t fully understand.

“We want to make sure we don’t add to the confusion for customers who may already be confused about what qualifies for a tax credit,” Bozzella said, “so I’m not entirely sure what the value of the new legislation is.”

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Follow AP’s coverage of electric vehicles at https://apnews.com/hub/electric-vehicles.

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