WASHINGTON — Automakers represented by the Alliance for Automotive Innovation expressed concern Wednesday that a "significant number" of electric vehicle buyers would be unable to use the tax credit as proposed in the Democrats' revised spending bill.
"We support — 100 percent — Sen. [Joe] Manchin's goal to reduce dependence on foreign nations for minerals and [are] committed to growing America's EV supply chain and adding jobs and capacity here," John Bozzella, CEO of the alliance, said in a statement Wednesday.
"But a likely result of this bill — as currently constructed — is that a significant number of consumers will not be able to take advantage of this credit in the early years when it is needed the most," he added.
Many of the alliance's members, which include the Detroit 3, Toyota and Volkswagen, are forming partnerships with battery suppliers and other EV-related companies in North America as they seek to gain a foothold in a more localized battery supply chain and reduce U.S. reliance on countries such as China.
"That's a process that is well underway," Bozzella said, "but it's also a change that doesn't happen overnight."
The EV tax credit proposal unveiled last week by U.S. Democratic Sens. Chuck Schumer and Manchin as part of the Inflation Reduction Act lifts the cap on the current $7,500 tax credit but adds increasingly stringent critical mineral and battery sourcing requirements for automakers as well as limits on vehicle sticker prices and the buyer's income.
Automakers have privately pushed back on the sourcing requirements, according to a Reuters report.
Sen. Debbie Stabenow told Reuters on Tuesday that "it's a very cumbersome, unworkable credit once the full restrictions set in" and that conversations are ongoing.
The Michigan Democrat previously championed a now-failed proposal that would have boosted consumer tax credits to as much as $12,500 for EVs assembled in a factory represented by a labor union with U.S.-produced batteries.
Stabenow did not immediately respond to a request from Automotive News for comment.
But Manchin — a key swing vote in the evenly split Senate — pushed back on concerns that the credit is too aggressive or unusable, telling automakers on Tuesday 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," Manchin told reporters. "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."
In April, the West Virginia senator questioned the need for an EV tax credit, given strong consumer demand and an ongoing reliance on China for battery components.