Manchin dismisses industry criticism of new electric vehicle tax credit

Among the many provisions of the Inflation Reduction Act (IRA) of 2022 is an overhaul of the federal electric vehicle tax credit. The changes would restore Tesla and General Motors eligibility and include a smaller credit for buying a used electric vehicle. Despite this, the bill is facing opposition from the auto industry, and most electric vehicles currently on sale would no longer be eligible. But the bill’s author, Sen. Joe Manchin, has little time for complaints.

Currently, almost all new plug-in vehicles are eligible for the plug-in electric drive vehicle credit, as set out in Section 30D of the Internal Tax Code, introduced on the basis that the high cost of a Lithium-ion traction is the main obstacle to electric vehicles reaching price parity with their gasoline or diesel alternatives.

Credit is based on battery capacity. Starting at $2,917 for a plug-in vehicle with a 5 kWh pack, the credit increases by $417 per kWh to a maximum of $7,500. But there’s a penalty for sales success – once a carmaker has sold 200,000 eligible plug-in vehicles, the credit starts to run out. So far, this has only happened to Tesla and General Motors, both of which started the process in 2018.

Some members of the Democratic Party wanted to extend this credit to stimulate the adoption of electric vehicles. In 2021, a more ambitious bill from the House of Representatives sought to increase the tax credit to a maximum of $12,500. This credit would have started at $4,000 and added $3,500 for a battery of at least 40 kWh. An additional $4,500 credit would have been available if the EV was manufactured at a unionized US facility, with a final $500 available for an EV manufactured primarily in the US (including battery).

In addition to encouraging domestic manufacturing of electric vehicles, this legislation also introduced a revenue cap — albeit in the mid to high six-figure range — plus a price cap, excluding sedans that cost more than $55,000. , pickup trucks over $64,000, SUVs over $69,000, and electric pickup trucks that cost over $74,000. The 2021 bill also proposed tax credits for used electric vehicles, a tax credit for commercial electric vehicles and tax credits for electric bicycles.

That legislation failed in the US Senate, largely because of strident opposition from Manchin, who has repeatedly criticized tax incentives for electric vehicles. Last year, he was one of three Democratic senators who voted to change the existing EV credit so that only taxpayers with incomes under $100,000 and only EVs costing less than $40,000 can qualify. . (This amendment was not adopted.)

Manchin was still upset with the idea in April of this year. “There is a waiting list for electric vehicles right now with the price of fuel at $4. But they still want us to throw [a] Credit of $5,000, $7,000 or $12,000 to purchase electric vehicles,” he told a Transportation Department hearing. “It makes no sense to me. When we can’t produce enough product for the people who want it and we’re still going to pay them to take it, that’s absolutely ridiculous in my mind.”