Objections heard for tax credits to EVs not meeting sourcing rules

WASHINGTON D.C.: US Senate Energy and Natural Resources Committee chair Joe Manchin has introduced legislation that imposes battery sourcing requirements on those electric vehicles seeking to qualify for $7,500 tax credits.

As some electric vehicles do not meet new requirements for a brief window of eligibility before the battery rules take effect in 2023, the US Treasury said in December that it will not issue new guidance on battery sourcing rules until March.

Under Manchin's legislation, the battery requirements for tax credits will be retroactive to 1st January.

In August, the $430 billion US Inflation Reduction Act was passed, which restricts the $7,500 consumer tax credits to North American-made EVs.

However, in December the Treasury Department said consumers leasing vehicles assembled outside North America could also benefit from the $7,500 tax credit for commercial green vehicles.

Meanwhile, General Motors told consumers that its Chevrolet Bolt EV is eligible for $7,500 in tax credits, but warned that the "credit amount is subject to change."

The Treasury Department was criticized by Manchin for failing to issue battery guidance by 1st January.

The treasury "continues to make the full $7,500 credits available without meeting all of the clear requirements, and created an opportunity to circumvent stringent supply chain requirements," Manchin stressed.

"The EV tax credits were designed to grow domestic manufacturing and reduce our reliance on foreign supply chains for the critical minerals needed to produce EV batteries," he added.