Enlarge / Democratic Senators Joe Manchin (L) and Debbie Stabenow (R) don't exactly see eye to eye on the auto industry's transition to electric vehicles. (credit: Tom Williams/CQ-Roll Call, Inc via Getty Images)

The new and somewhat-complicated rules governing which cars do or don't qualify for the new clean vehicle tax credit look like they might get tweaked a little in the near future.

Before, the tax credit was linked to the battery-storage capacity of a plug-in hybrid or battery-electric vehicle. But the Inflation Reduction Act changed that— now a range of conditions must be met , including final assembly in North America and an annually increasing percentage of locally sourced minerals and components within that battery pack.

On the one hand, the domestic sourcing requirements are beneficial because they are stimulating the development of local battery mineral refining and manufacturing here in the United States, adding well-paying jobs in the process. But the new rules have also significantly reduced the number of EVs that qualify.

Enlarge / US Senator Joe Manchin (D-W.V.) is a millionaire thanks to coal, gas, and oil interests. He was responsible for rewriting the US electric vehicle incentives. (credit: Aaron M. Sprecher/Bloomberg via Getty Images)

US Senator Joe Manchin was instrumental in rewriting the nation's electric vehicle incentives , but now the West Virginia Democrat says he wants to sue the federal government "if I'm allowed to" in order to stop too many EVs from reaching US customers with battery packs that contain materials and components refined, processed, or manufactured abroad. The politician made the remarks during a panel on Wednesday, according to S&P Global .

Originally, the IRS tax credits offered to car buyers to incentivize them to purchase a plug-in electric vehicle were linked to the size of the car's battery. But as part of the Inflation Reduction Act of 2022, the rules were changed. Now, the $7,500 tax credit is only applicable to "clean vehicles"—either battery EVs or hydrogen fuel cell EVs, not plug-in hybrids.

Where do your minerals come from?

There are several more requirements , including final assembly in North America, but for most new EVs, the stumbling block is a requirement that battery components be domestically sourced.

Enlarge / "The IRA and the EV tax credits must be implemented according to the Congressional intent to ensure the United States, as the superpower of the world, is not beholden to countries that don’t share our values," Senator Joe Manchin said in a statement sent to Ars. (credit: Drew Angerer/Getty Images)

Senator Joe Manchin (D-W.Va.) is unimpressed with the temporary leniency shown toward electric vehicles in terms of the federal tax credit, and he's determined to do something about it. On Wednesday the Senator introduced a new bill, " the American Vehicle Security Act of 2023 ." The bill would immediately implement the much stricter new tax credit rules contained in last year's Inflation Reduction Act even though the Department of the Treasury hasn't finished working out how to do that. Should Manchin's bill pass, it looks unlikely that any EV would qualify.

"It is unacceptable that the U.S. Treasury has failed to issue updated guidance for the 30D electric vehicle tax credits and continues to make the full $7,500 credits available without meeting all of the clear requirements included in the Inflation Reduction Act," Manchin said in a statement sent to Ars.

That's not all. According to some outlets , the Senator wants anyone who might have been issued an EV tax credit in 2023 to have to repay it, unless they could prove the car satisfied the domestic sourcing requirements. And that could be costly news for anyone who rushed out to buy a new Tesla after that company slashed prices to allow more of its EVs to qualify for the new tax credit rules.

Enlarge / Sen. Joe Manchin (D-W.V.) speaking to reporters in the Hart Senate Office building on August 1, 2022, in Washington, DC. (credit: Anna Moneymaker/Getty Images)

Among the many provisions of the Inflation Reduction Act (IRA) of 2022 is a revamp of the federal tax credit for electric vehicles. The changes would restore the eligibility of Tesla and General Motors and includes a smaller credit for the purchase of a used EV. Despite this, the bill is running into opposition from the auto industry, and most of the EVs currently on sale would no longer qualify. But the bill's author, Senator Joe Manchin, has little time for complaints.

Currently, almost all new plug-in vehicles qualify for the plug-in electric drive vehicle credit, as laid out in Internal Revenue Code section 30D, introduced on the basis that the high cost of a lithium-ion traction battery is the main impediment to electric vehicles reaching price parity with their gasoline- or diesel-powered alternatives.

The credit is based on battery capacity. Starting at $2,917 for a plug-in vehicle with a 5 kWh pack, the credit increases by $417 per kWh to a maximum of $7,500. But there's a penalty for sales success—once an automaker has sold 200,000 qualifying plug-in vehicles, the credit begins to sunset. So far, this has only happened to Tesla and General Motors , both of which triggered the process in 2018.