Senator Manchin aims to close battery loophole around the $7,500 EV tax credit

He's trying to halt credits from being offered to foreign-sourced batteries before March.

President Biden viewing a Chevy Silverado EV with GM CEO Mary Barra. (Kevin Lamarque / reuters)

Senator Joe Manchin, chairman of the Senate Energy and Natural Resources Committee, has introduced a new bill that squashes a small loophole around the Inflation Reduction Act's (IRA) $7,500 EV tax credit. The new credits are restricted to cars with final assembly in the US, as well as those with a certain amount of North American battery content (an amount that increases every year). But, the U.S. Treasury has delayed its final rules on battery guidance until March, which means EVs with foreign batteries can still receive the full $7,500 in credits until then. Manchin's legislation, dubbed the American Vehicle Security Act (AVSA), would push the battery requirement back to January 1st.

“It is unacceptable that the U.S. Treasury has failed to issue updated guidance for the 30D electric vehicle tax credits and continues to make the full $7,500 credits available without meeting all of the clear requirements included in the Inflation Reduction Act," Manchin wrote a statement. "The Treasury Department failed to meet the statutory deadline of December 31, 2022, to release guidance for the 30D credit and have created an opportunity to circumvent stringent supply chain requirements included in the IRA. The IRA is first-and-foremost an energy security bill, and 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."

If it's passed, the bill would be disappointing news for anyone who rushed out to buy an EV before March (something plenty of car publications were suggesting). As Autoblog notes, the AVSA doesn't touch on the other IRA loophole, which also allows for the full credit for leased cars built outside of the US. But given Manchin's early obstruction to the IRA, as well as his push against lax battery rules, it wouldn't be surprising to see another bill in the works.