Lawmakers are pushing for changes to recent EV tax credit requirements signed into law in August, with the hope of delaying stipulations on manufacturing and material sourcing.
According to a recent report from Automotive News, Democratic Senator Raphael Warnock introduced a bill in September that would provide an extended phase-in period for the new EV tax credit with regard to the North American final assembly requirement and mineral / battery component sourcing requirements. Warnock will face Republican challenger Herschel Walker in a runoff election next month.
The new bill, titled the Affordable Electric Vehicles for America Act, is supported by three House Democrats, U.S. Reps. Eric Swalwell of California, Terri Sewell of Alabama, and Emanuel Cleaver of Missouri, who introduced a companion bill this month. All three House lawmakers won their respective midterms reelections.
Under the Inflation Reduction Act signed into law by President Joe Biden in August, EVs must be assembled in North America in order to be eligible for the new tax credits. Additionally, the rules include increased sourcing requirements for battery materials and components, restricting the use of content from “foreign entities of concerns,” as well as stipulate greater use of materials from countries with an established free trade agreement with the U.S.
However, an array of major automakers and foreign governments have weighed in on the EV tax credit requirements vying for exemptions, including the Japanese government and Toyota, which have stated that U.S. allies like Japan should be treated “no less favorable” than North American countries with regard to assembly locations and mineral supply chains.
South Korean automaker has also insisted that its vehicles should be exempt from the requirements until the completion of its new $5.54 billion EV and battery plant in Georgia. The new Georgia facility will produce Hyundai, Genesis, and Kia models, and is estimated to create 8,000 new jobs when it opens in 2025.
Last month, the U.S. Treasury Department announced it was seeking input as it moved to implement the new EV tax credit rule changes. The U.S. Treasury will issue guidance by December 31st that further defines credit eligibility restrictions.