Manchin pushes back over EV tax credit battery content rules

Mercedes-Benz battery factory

Implemented under the Inflation Reduction Act (IRA), the battery-materials rules aim to cut China out of the U.S. EV supply chain. The Biden administration last month issued guidelines easing these rules for two years, but still keeping restrictions on Chinese content in place. That appears to be Manchin is taking issue with.

The Senator said in the hearing that, rather than strengthening U.S. battery resources, the Treasury Department’s interpretation of the battery-materials rules would keep China “in the market for the entire extent of the IRA.” He called the easing the rules, allowing automakers to use China-sourced battery materials such as graphite for a longer period of time, would “break the law.”

Ford Battery Benchmarking and Test Laboratory in Allen Park, Michigan

This is not the first time Manchin has spoken out against an EV-related aspect of the IRA. While still a Democrat, he threatened to stop the IRA over an initial focus on union-made vehicles. That helped scrap a proposed union-made bonus for the EV tax credit, one that would have admittedly applied to only a small number of models initially.

Manchin has also spoken out against the so-called “leasing loophole” afforded by the IRA. In a stretch of the original intent allowed by the Biden administration, that’s led to federal subsidies for EVs that wouldn’t qualify for the tax credit as purchases, including ones that exceed price caps set by the IRA. A surge in EV leasing has followed—and an artificial incentive for automakers to continue making more luxury EVs.