Automakers ask U.S. Senator Manchin to change electric vehicle tax credit proposal

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U.S. Senator Joe Manchin (D-WV) talks to reporters on Capitol Hill in Washington, U.S. August 2, 2022. REUTERS/Jonathan Ernst

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WASHINGTON, Aug 2 (Reuters) – Automakers want Democratic Sen. Joe Manchin to reconsider his proposal to restructure the $7,500 tax credit for electric vehicles, prompting fears it is largely unworkable due to new supply requirements for battery components and critical minerals.

Manchin on Tuesday expressed little interest in revising his proposal.

“Tell (the automakers) to be aggressive and make sure we mine in North America, we process in North America, and we put a line on China,” Manchin told reporters. “I don’t believe we should build a mode of transport on the back of foreign supply chains. I’m not going to do that.”

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Manchin said the United States builds its own gasoline vehicles and engines. “Now all of a sudden – now we can’t?” asked the West Virginia senator. “Go on.”

The proposal would lift the current cap of 200,000 vehicles on the $7,500 credit and impose new restrictions on automakers that have not yet reached that limit.

The joint proposal by Manchin and Senate Democratic Leader Chuck Schumer would also create a new $4,000 tax credit for used electric vehicles.

Automakers privately claim that percentage targets for the supply of critical minerals and battery components are too high and growing too quickly.

Democratic Senator Debbie Stabenow of Michigan told Reuters on Tuesday: “It’s a very heavy and unachievable appropriation once all the restrictions are put in place. There are conversations going on.”

She noted that the bill includes billions of dollars in new loans and grants for automobile and battery production and credits for commercial vehicles.

EV startup Rivian Automotive Inc (RIVN.O) said the proposed EV tax credit “will cut the rug for consumers considering purchasing an American-made electric vehicle” and added that “the final package must extend the transition period”.

General Motors Co (GM.N) said on Friday that “some of the arrangements are difficult and cannot be achieved overnight.” The automaker added that it was “encouraged by the framework provided in the legislative text”.

Asked whether automakers had submitted specific changes to Manchin, the head of the Alliance for Automotive Innovation auto trade group, John Bozzella, told Reuters. “We have good conversations.” He declined to elaborate.

The bill includes increasing requirements for the percentage of North American battery components by value and would ban all batteries after 2023 with Chinese components. Automakers including GM and Tesla Inc (TSLA.O) previously hit the cap and are no longer eligible for the existing electric vehicle tax credit.

Republican Sen. Marco Rubio said Tuesday he would table an amendment to ensure EV credits can only apply if critical EV battery minerals come from the United States or a country with which the United States United have entered into a free trade agreement.

The new electric vehicle tax credits, which would expire at the end of 2032, would be limited to trucks, vans and SUVs with a suggested retail price of no more than $80,000 and cars with a price no more than $80,000. $55,000. They would be limited to families whose adjusted gross income does not exceed $300,000 per year.

President Joe Biden’s goal is for electric vehicles to account for half of all new vehicles sold by 2030.

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Reporting by David Shepardson in Washington Editing by Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.


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