Manchin Presses Energy Secretary Over Changes to EV Tax Credit Policy

Sen. Joe Manchin (D-W.Va.), Chairman of the Senate Energy and Natural Resources Committee, presides over a hearing in Washington on Feb. 16, 2023. (Kevin Dietsch/Getty Images)

Sen. Joe Manchin (D-W.Va.) grilled Energy Secretary Jennifer Granholm on Thursday over the Biden administration’s “liberalization” of the electric vehicle (EV) tax credit embedded in the Inflation Reduction Act (IRA).

Manchin, who chairs the Senate Energy and Natural Resources Committee, warned Granholm at a hearing that the administration’s lax interpretation of the IRA would “bust the budget” while also diverting money and jobs to China.

“Although the IRA will invest in technologies to decarbonize, it is first and foremost an energy security bill,” the senator noted in his opening remarks. “Unfortunately, this administration seems intent on disregarding that in an effort to implement a climate law that Congress didn’t pass. And I will do everything in my power to hold the administration’s feet to the fire and prevent actions that circumvent the letter of the law or its clear intent.”

And Manchin made good on that promise in his interactions with Granholm, pressing her for answers on why the administration had loosened the domestic production requirements set forth under the IRA for electric vehicles to be eligible for tax credits.

The Letter of the Law

Under the IRA, a certain percentage of an electric vehicle’s battery components must be manufactured or assembled in North America, and a certain percentage of the critical minerals used in that process must also be sourced from the United States or a country that has a free trade agreement with the United States.

On March 31, the Treasury Department issued new proposed guidance on how the administration plans to interpret and impose those restrictions to provide “clarity and certainty” to manufacturers.

But that guidance, Manchin argued, loosened the eligibility requirements so that cars manufactured with materials sourced from China would be included—something the IRA explicitly sought to prevent.

“I don’t want to be reliant on foreign supply chains,” he said. “I’d rather have it right here in the United States or at least in North America, where we have better control.”

Granholm, however, said the administration shared that same goal.

“Since these laws and since the beginning of the president’s term,” she said, “there have been 150 battery companies or supply chain elements that have announced they’re opening up in the United States, where it would have been, to your point, before in China or Asia. … That equals almost $100 billion worth of investment in the U.S.”

Another matter the senator decried was the administration’s reclassification of the manufacturing of certain foils, powders, and other materials as “processing” rather than “manufacturing” under the terms of the law.

Granholm, in response, confirmed that her department had advised the Treasury Department on those redefinitions, stressing that the Infrastructure Investment and Jobs Act had been used as a guide.

But Manchin took issue with that explanation, contending that the language of the law was guidance enough.

“This is the bill,” he said, pointing to a poster board with the IRA requirements. “This is what y’all broke the law by … referring back to the bipartisan infrastructure bill. It had nothing to do [with the infrastructure bill]. This is the IRA we passed.”

National Debt

In loosening the tax credit requirements, Manchin stressed that the administration would exacerbate the country’s worsening debt crisis as more people would qualify for the credit than Congress had anticipated when drafting the bill.

“You’re going to bust the budget,” he said. “This bill’s not going to stay within the confines of what we had the CBO [Congressional Budget Office] score it. … Why in the hell are we totally committed to going further and further in debt?”

Adding that both Republicans and Democrats needed to come together to address the matter of the debt ceiling, he asked Granholm what the impact would be on her department if that did not happen.

“The national security of the United States runs through, in part, the Department of Energy,” she replied. “That is critical. We cannot jeopardize our national nuclear security administration or our competitiveness in attempting to get all of these investments back in the United States. All of that would be jeopardized.”