2022 ALL STAR | INDUSTRY NEWSMAKER OF THE YEAR
U.S. senator, D-W.Va.
Will he or won’t he?
That was the question on many automotive industry leaders’ minds for most of 2021 and part of this year as they waited to see whether Sen. Joe Manchin, a Democrat from a small coal-mining town in West Virginia, would back a party-line legislative package that covered a bulk of President Joe Biden’s economic and climate agenda, including expanded federal tax credits for electric vehicles.
At an event in West Virginia last November to mark a $240 million investment by Toyota Motor North America, Manchin, 75, said he opposed a proposal on EV tax credits that would grant an extra $4,500 for union-made EVs in one version of the Democrats’ budget reconciliation plan. A month later, he squashed the whole package, citing concerns over inflation and U.S. debt.
More “will he or won’t he?” persisted heading into 2022, as negotiations on the broader spending bill fizzled out, picked up and stumbled again. During a Senate hearing in April, Manchin even questioned the need for EV incentives, given strong consumer demand and an ongoing reliance on China for battery components.
But in late July, Manchin made headlines when he and Senate Majority Leader Chuck Schumer, D-N.Y., reached a breakthrough deal on a landmark health, climate and tax bill — now known as the Inflation Reduction Act — after many failed attempts to move forward on legislation that hinged on Manchin’s approval.
Leading up to the deal, automakers and industry trade groups had pressed Congress for incentives that were available to the broadest range of vehicles and buyers to help grow the mass market for EVs in the U.S.
Instead, the revamped EV tax credit for new vehicles in the law will delay or block access to the credit for years, as it imposes new restrictions on where the critical minerals used in batteries are extracted or processed, where battery components are made or assembled and where final assembly of the vehicle occurs, among other eligibility constraints.
Manufacturers of electrified vehicles — battery-electrics, plug-in hybrids and fuel cells — are now deciding whether they’ll chase all, some or none of the new tax credit. And, depending on their strategies, it could mean reshaping their supply chains sooner than anticipated.
Meanwhile, Manchin got the deal he wanted.
The senator has pushed back on the industry’s concern that the credit is too aggressive or unusable, telling automakers to “get aggressive” and “make sure that we’re extracting in North America, that we’re processing in North America, and we quit relying on China.”
“I was very, very adamant that I don’t believe that we should be building a transportation mode on the backs of foreign supply chains, and I’m not going to do it. We’ve never done that in America,” he told reporters in August. “We build our own cars. We build our own combustible engines. We’ve done everything. Now all of a sudden, now we can’t? No.”