The extension of a tax credit for purchasers of electric vehicles appears to have died on Capitol Hill after Sen. Joe Manchin (D-West Virginia) refused to support climate change provisions President Joe Biden hoped pass as part of the “Build Back Better” package.
Build Back Better died in December after efforts to reach a compromise acceptable to Manchin. But recently Democrats have been scrambling to a re-assemble a package after Manchin indicated he would support some key provisions of the original bill, and the discussions were intense, according to Representative Debbie Dingell (D-Michigan), a key supporter of the auto industry on Capitol Hill.
The Alliance for Automotive Innovation, which represents more than 20 auto manufacturers, previously argued — with support of top auto executives — the credits are necessary to expand the move away from vehicles with internal combustions engines.
Manchin digs heels in
However, according to recent press accounts, Manchin was unwilling to go along with climate change provisions including removing the caps on the $7,500 tax credit for the sales of EVs. Under the original legislation written in 2007, each manufacturer was limited to 200,000 individual credits for customers.
Sen. Bernie Sanders (I-Vermont) said during an appearance on ABC’s “This Week” Sunday morning Manchin sunk the climate provisions.
“Nothing new about this,” Sanders said during his ABC appearance. “The problem was that we continued to talk to Manchin like he was serious. He was not.” He noted the West Virginia senator and coal baron benefited from campaign contributions from fossil fuel companies, Sanders said.
Clouds hover over future path
Manchin told reporters last week that he wants to delay decisions on the climate and tax bill because of high inflation.
Democrats cannot pass the bill without Manchin’s support in a U.S. Senate that is evenly split, 50-50, with Vice President Kamala Harris serving as a tiebreaker in the event one is needed. In addition, with Manchin remaining part of the Democratic caucus, Democrats also control the chairmanships of key committees, such as Judiciary, and retain the ability to bring legislation to the floor for an up or down vote.
With EV sales picking up momentum — EV’s accounted for 5.6% of all sales during the second quarter of 2022, according to Cox Automotive. With more EV models reaching dealers and motorists, manufacturers are running out of credits. Tesla and General Motors are out of credits and Toyota just passed the 200K threshold. Ford and Nissan are not far behind with Honda and Hyundai moving quickly as well.
With the average price of new electric vehicle climbing past $60,000, the EV tax credit has been attacked it as a giveaway to rich by Congressional Republicans, who have otherwise voted for other tax preferences for the wealthiest Americans.
