Ahead of a crucial vote, Sen. Joe Manchin (D-W.Va.), chair of the Senate Energy and Natural Resources Committee, has voiced his concerns regarding recent changes to electric vehicle (EV) tax credit rules.
What Happened: Manchin, a Democrat, expressed his concern that the Treasury’s recent guidance on EV tax credits could benefit Chinese companies at the expense of American taxpayers, Reuters reported.
He warned that it would increase U.S. dependence on foreign nations, particularly China, for battery and vehicle component supply chains.
He said Chinese firms will capitalize on the electric vehicle tax credit “while hurting American taxpayers and increasing America's reliance on foreign nations for battery and vehicle component supply chains, including China.”
Why It Matters: The power of the Senate to overturn the Treasury’s guidance remains unclear. Earlier this week, Manchin sought a legal opinion from the U.S. Government Accountability Office about the Congressional Review Act’s applicability to the guidance.
Earlier in December, the Treasury issued guidance that restricts the use of Chinese content in batteries eligible for EV tax credits starting next year. As a result, Ford F and Tesla TSLA announced that some EV models would not qualify for tax credits in the coming year.
The Alliance for Automotive Innovation, a group representing almost all major automakers, expressed that the choice to grant a two-year exemption for trace materials was “significant and well-advised.” Without this exemption, it could have rendered nearly all vehicles ineligible.
New regulations set to take effect in 2024 and 2025 under a law passed in August 2022 aim to decrease U.S. reliance on China for essential EV battery supplies. The Treasury confirmed that exemptions granted to some materials, each representing less than 2% of the value of battery-critical minerals, will extend through 2026.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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