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 / Can big price cuts stop Tesla's share price slide? More of its cars now qualify for US tax credits, at least. (credit: Ethan Miller/Getty Image)

At a time when every other automaker is having trouble building enough electric vehicles to satisfy demand, Tesla is seemingly having the opposite problem. Overnight, the Texas-based automaker slashed prices by thousands of dollars for some models in an effort to spur demand. Earlier this month, the company's share price—which had already slumped by 70 percent in 2022—was further affected when Tesla announced it had missed its annual production goal by 20 percent .

Now, the cheapest Tesla you can buy—the Model 3 RWD—has dropped to $43,990, a $3,000 savings compared to 2022's prices . The Model 3 Long Range is currently unavailable, but the Model 3 Performance is $9,000 cheaper than before, at $53,990.

You can still buy a Model Y Long Range from Tesla, and in five-seat configuration, it's now $12,000 cheaper than yesterday, at $53,990. An even bigger discount applies to the Model Y Performance, which is now $13,000 cheaper, at $56,990. Adding a third row of seats to either of these Teslas carries a $4,000 premium.

Enlarge (credit: Aurich Lawson | Getty Images)

The beginning of the new year means the start of a new electric vehicle tax incentive in the US. Until now, the IRS allowed taxpayers to claim a tax credit of up to $7,500 on a new plug-in vehicle, with the exact amount determined by the battery's capacity in kWh. Additionally, the credit was designed to sunset once a manufacturer sold its 200,000th plug-in, although only Tesla and General Motors ever reached that milestone.

But the Inflation Reduction Act (IRA) of 2022 rewrote the plug-in vehicle tax incentives, and the new rules went into effect at the beginning of January. Now, the tax credit is for "clean vehicles" rather than plug-ins, and it covers fuel cell EVs, some plug-in hybrid EVs, and all battery EVs.

It's a more complex beast now, however. The maximum tax credit is still $7,500, but to qualify, a vehicle must have a battery capacity of at least 7 kWh and a gross vehicle weight rating of less than 14,000 lbs, and it must have undergone final assembly in North America. There are price caps—vans, SUVs, and pickup trucks can't cost more than $80,000, and other vehicles must stay under $55,000 to qualify. There are income caps, too: $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other tax filers.

Enlarge / Volkswagen is one of several automakers that are already assembling their EV battery packs locally. But the value of the materials that go into the pack will determine whether it qualifies for the revised clean vehicle tax credit. (credit: Volkswagen)

The Inflation Reduction Act of 2022 passed the United States Senate on Sunday and heads to the House of Representatives, where it is expected to pass easily. It contains numerous changes to the tax code, meant in large part to prevent the worst effects of climate change.

Among these is a revision to the existing tax credit for new plug-in electric vehicles. As we detailed last week , the IRA introduces income caps for the tax credit, and it will only apply to sedans that cost less than $55,000 and other EVs that cost less than $80,000. The bill also drops the 200,000 vehicle-per-OEM cap on the tax credit, which would benefit both General Motors and Tesla.

At least it will if their EV batteries are mostly made within North America, with at least 40 percent of the materials used having been extracted and processed within North America or a country with a free trade agreement. Now, instead of being based on battery capacity, half the credit ($3,750) is tied to where the pack is made, and the other half its supply chain. And that will be a problem if you're looking to buy an EV in 2023.