Biden Administration Faces Criticism Over Exemptions in EV Tax Credit Rule

Senator Joe Manchin, the Chair of the Senate Energy Committee, has criticized the Biden administration’s new guidance on foreign entities of concern (FEOCs) and their eligibility for electric vehicle (EV) tax credits under the Inflation Reduction Act (IRA).

According to Manchin, the guidance contradicts the text of the climate law. Specifically, he accused the administration of finding “workarounds” to the IRA’s restrictions on Chinese battery components.

The guidance, released on Friday, outlines the criteria for companies to be classified as FEOCs, which include disqualifying connections to countries like North Korea, China, Iran, and Russia. However, Manchin took issue with provisions that make exceptions for certain trace critical minerals. The Treasury Department stated that these minerals account for less than 2% of the critical minerals used in batteries.

In a statement, Manchin criticized the proposed Treasury rules, stating that they exemplify the Biden administration’s disregard for the law in its attempt to implement a bill that did not pass.

He pointed out that the IRA explicitly states that consumer vehicles are ineligible for tax credits if any of the applicable critical minerals in their batteries come from China or other foreign adversaries after 2024.

Manchin argued that the administration’s actions create loopholes and delays that allow China to benefit at the expense of American taxpayers.

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Manchin played a crucial role in the development of the IRA in 2022, having previously withdrawn his support from the more ambitious Build Back Better Act. Since then, he has been highly critical of the law’s implementation, particularly regarding electric cars.

He accused the Biden administration of prioritizing renewables while neglecting energy security provisions.

In August, on the law’s anniversary, he vowed to challenge those who seek to undermine the legislation and fight against the administration’s efforts to turn the IRA into a radical climate agenda instead of faithfully implementing the law as it was passed.