[Asia Economy Reporter Haeyoung Kwon] Democratic Senator Joe Manchin (West Virginia), who has led the Biden administration's Inflation Reduction Act (IRA), has introduced a bill to retroactively apply detailed regulations for electric vehicle subsidies starting January 1 of this year.
On the 25th (local time), Senator Manchin announced that he had introduced the "American Automobile Security" bill containing these provisions.
The IRA provides a tax credit benefit of up to $7,500 for electric vehicles finally assembled in the United States. ▲$3,750 is granted when North American battery components are used ▲$3,750 is granted when minerals mined or processed in the U.S. or countries with which the U.S. has a Free Trade Agreement (FTA) are used in the battery.
The U.S. Treasury Department has postponed the announcement of detailed regulations related to critical minerals and battery component requirements until March, implementing only the remaining policies from January 1. It has also partially opened the door for some leased vehicles assembled overseas to receive tax subsidies. Opposing this, Senator Manchin introduced a bill on this day to halt the electric vehicle tax credit benefits immediately if the mineral and battery requirements are not met.
According to the bill introduced by Senator Manchin, these regulations will be retroactively applied from January instead of March. If this bill is enacted, electric vehicle buyers who fail to meet detailed regulations such as critical minerals and battery component requirements will have to return the subsidies. In particular, the bill includes strict application of mineral and battery component procurement regulations, which could make broad interpretations of FTAs difficult if the bill passes Congress.
However, U.S. media have analyzed that President Joe Biden is proactive about the current IRA implementation, and given the composition of seats in both the House and Senate, the likelihood of Senator Manchin’s legislative success is low.
Senator Manchin has consistently advocated for strict enforcement of the IRA. Earlier last month, he sent a letter to Treasury Secretary Janet Yellen expressing opposition to the interpretation of the bill that provides subsidies for commercial electric vehicles.
Senator Manchin stated, "It is unacceptable for the Treasury Department to continue offering a $7,500 tax credit when clear requirements included in the IRA are not met," emphasizing, "The IRA and electric vehicle tax credits must be implemented as intended by Congress."
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