© Reuters. FILE PHOTO: U.S. FILE PHOTO: U.S. Senator Joe Manchin (D.W.Va.) talks to reporters after the weekly Democratic caucus luncheon held at the U.S. Capitol, Washington, D.C., U.S., Nov 29, 2022. REUTERS/Sarah Silbiger
By David Shepardson
(Reuters) – U.S. Senator Joe Manchin, a Democrat, chairs the chamber’s energy panel. On Tuesday, he asked the Treasury Department not to allow a commercial credit for electric vehicle sales or consumer leasing.
Reuters first reported on South Korea’s push for a credit for electric vehicles in order to increase consumer EV accessibility.
Inflation Reduction Act of the United States (IRA) was passed in August. It ended $7,500 consumer credit credits for electric cars made outside North America. This upset South Korea, Japan, the European Union and others.
Climate bill also places significant restrictions on component sourcing and battery minerals, sets income and price limits for qualified vehicles, and attempts to phase out Chinese batteries or components. However, the commercial credit “45W” doesn’t have the same sourcing restrictions as the consumer credit “30D”.
“Some automakers and foreign governments have asked your agency to interpret 45W broadly so that rental cars, leased and rideshare vehicles can be allowed (such as those used by Uber (NYSE:)). Lyft (NASDAQ :)), a significant portion of the U.S. automobile market to be eligible for $7,500 commercial credit as a way out of strict sourcing requirements.” Manchin, who chairs Energy Committee and largely wrote EV tax credit rules, sent a letter directly to the Treasury Department. The Treasury Department did not immediately respond.
Manchin stated that if the interpretation is successful, “companies won’t be able to invest in North America to satisfy the requirements of 30D. Instead, they will continue to do business as usual, which puts our transportation sector further at stake.”
Manchin indicated that he understood “many allies may be upset about the strong domestic sourcing restrictions included in the IRA, and are looking for a solution.” I want to be clear: this bill wasn’t intended to harm any of the allied partners. It was created to strengthen this country.
Toyota Motor (NYSE:) Corp stated last week that “the absence of criteria to qualify (commercial credit) could undermine the IRA’s goals to increase domestic production of EV battery and maintain America’s energy independence.”
Hyundai and Kia would like the U.S. Treasury allow people leasing EVs credit and to be eligible for up to a $4,000 tax credits for used EVs if their leases end.