Following the passage of the Inflation Reduction Act of 2022 (IRA), much debate has centered around the EV tax credits contained within the bill – or, more specifically, where those tax credits will go. Ford CEO Jim Farley has said that these credits will be a big boon for the automaker, its suppliers, and both its retail and commercial customers that are looking to go electric, to the point where Ford Pro is offering consultations with professional services firm Ernst & Young LLP to help customers navigate the intricacies of these new IRA EV tax credits. However, a few are opposed to the fact that some of these IRA tax credits may wind up going to foreign entities – like China – a list that includes the United Auto Workers (UAW) union and senator Joe Manchin, who is now threatening to sue U.S. Treasury over the matter, according to Reuters.
“If it goes off the rails and violates the intent of the climate legislation approved in August, I will do whatever I can – if that means going to court and I can do it, I’d do it,” Manchin said. “Manufacturing is meant to bring manufacturing back to the United States. It’s not basically allowing everyone to put all the parts and build everything you can for that battery somewhere else and then send it here for assembly.”
“Instead of implementing the law as intended, unelected ideologues, bureaucrats, and appointees seem determined to violate and subvert the law to advance a partisan agenda that ignores both energy and fiscal security,” Manchin added. “The administration is attempting at every turn to implement the bill it wanted, not the bill Congress actually passed.” The senator also urged President Joe Biden “to sit down with fiscally minded Republicans and Democrats to negotiate common-sense reforms to out-of-control fiscal policy.”
Machin’s main concern revolves around how the U.S. Treasury will classify manufacturing and processing operations to determine eligibility for the $7,500 IRA tax credit. Currently, 50 percent of a vehicle’s battery components must be assembled or produced in America for buyers to qualify for half of that credit, while 40 percent of the value of critical minerals used in those batteries must be sourced from either the U.S. or a company with which it has a free trade agreement in place to receive the other half, with both numbers slated to rise by 10 percent each year moving forward.
We’ll have more on these IRA EV tax credits soon, so be sure and subscribe to Ford Authority for non-stop Ford news coverage.