August 12, 2022

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Democrats at Odds Over EV Tax Credit in Manchin-Schumer Bill

(Bloomberg) — Michigan Democratic Senator Debbie Stabenow is pushing for last-minute changes to stringent new electric-vehicle tax-credit limits in her party’s tax and spending deal amid a pressure campaign from the auto industry.

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Stabenow’s efforts to tweak the bill’s language risks creating a new wrinkle for Senate Democrats still struggling to get all 50 members of their caucus to support the $433 billion measure and pass it in the coming days.

Stabenow, who called the provision a “serious concern,” said the EV tax credit, worth billions of dollars, wouldn’t be usable for years under the deal forged by West Virginia Senator Joe Manchin and Majority Leader Chuck Schumer.

“Once these are implemented, none of the auto companies will able to offer that credit to consumers,” Stabenow, a staunch advocate of her home state’s auto industry, said of the changes to the credit Wednesday. “You would need multiple years down the road before that can happen.”

Read: Carmakers Blitz Congress to Fix EV Tax Credit They Can’t Use

The bill is the product of more than a year of negotiations, and changing it at this point is unlikely. Manchin, who walked away from a more expansive tax-and-spending bill in December, has railed against the $7,500 vehicle tax credit for months, and even dismissed it as “ludicrous.”

But Stabenow’s resistance shows the power any one Democrat holds in the evenly divided Senate — particularly for legislation the party plans to push through on a simple majority, using special budget rules amid unified Republican opposition.

Major automakers including Ford Motor Co., General Motors Co. and Toyota Motor Corp. have launched a lobbying blitz seeking to blunt Manchin’s limits to the credit. Those limits include prohibitions on batteries and critical minerals that are processed in China and other “foreign entities of concern,” which could render the credit useless.

Other limits include new caps on vehicle price and consumer income that have drawn opposition from newer automakers like Rivian Automotive LLC.

Further complicating matters for Democrats, electric vehicle maker Lucid Motors Inc., which has a production facility in Arizona, is reaching out to homestate Senator Kyrsten Sinema, a person familiar with the matter said.

Sinema is the key Democratic holdout on the bill and has been speaking with Republicans and industry groups like the Arizona Chamber of Commerce about its provisions.

Sinema Gets an Earful From GOP, Business in Bid to Halt Tax Plan

Other home-state energy interests are making direct appeals to Sinema, underscoring not only her decisive role but also the stakes of the bill’s climate provisions for alternate-energy businesses.

The Senate’s top rules official this week is considering whether the provisions in the Manchin-Schumer deal comply with the budgetary rules that Democrats are using to bypass Republican filibuster. The domestic-content provisions are especially vulnerable to being stricken, since they may be ruled as not strictly related to the federal budget.

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