We’re not yet at the U.S. Treasury Department’s declared deadline of, well, tomorrow to issue guidelines for EV credits and people are already digging in. On Wednesday, U.S. Sen. Joe Manchin from West Virginia said he was ready for a fight if the issued guidance isn’t what he expects.
“I think they’re going to try to screw me on this,” Manchin said in Washington. “I’m willing to go to court. I’m willing to stop it all.”
His threats aren’t exactly hollow either. As a refresher, here’s how we got to this point. The revamped EV tax credit under the Inflation Reduction Act passed last year includes provisions for battery sourcing requirements along with assembly requirements. To qualify for the full $7,500 credit, EVs would have to comply with both, each comprising 50% of the total sum. While several EVs are assembled in the U.S., and more are on the way, nearly none of the EVs available to retail shoppers would comply with the battery sourcing requirements as it stood. When that legislation was passed, automakers such as BMW, Volkswagen, and more announced plans to build battery facilities in the U.S. with lightning speed to comply, and other countries, including Japan and the European Union announced trade deals that would open the doors for their countries to produce batteries bound for the U.S. that would comply. Those facilities announced here will take time to come online, most around 2025, which means automakers could leave $3,750 on the table while they waited for battery operations to ramp up or trade deals to be made.
On Jan. 1, when the new EV credit took effect, lawmakers paused the battery sourcing requirement until further guidance was issued—due Friday—about what constituted the materials requirements that would ramp up over the coming years. What’s unknown is what materials need to be sourced from where, where final assembly needs to take place, or recycled material counting toward the requirement. As a result, all EVs that met the assembly criteria received the full credit until March 31.
Enter Manchin. The West Virginia senator was by far the largest and stickiest cog in the machine that passed the EV credit bill last year and appears to be playing the same role again. His vocal opposition and potential litigation over whatever guidance is issued could bring everyone back to the table again to negotiate battery materials, again. However, it’s highly likely that if that happens, and automakers are left in limbo again, shoppers may just get the whole credit again until DC figures out what it wants to do. Not bad.
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