Pro football coaching legend Vince Lombardi once famously shouted from the sidelines, “What the hell is going on out here?” Watching what has unfolded in Washington over the last couple of weeks, we’re wondering the same thing.
A new era of electric vehicle tax credits following passage of the Inflation Reduction Act was supposed to begin when the calendar flipped to 2023, but the federal government has taken an already complicated situation and made it flat-out confounding for many automakers, dealers and consumers.
Late last month, the Treasury Department said it missed its year-end deadline to issue proposed guidance on critical mineral and battery component requirements, delaying it until at least March.
Then Treasury, citing “long-standing tax principles,” said EVs leased by regular consumers could qualify for commercial tax credits intended for businesses. Sen. Joe Manchin, the catalyst behind the Inflation Reduction Act, has accused Treasury of kowtowing to vehicle sellers looking for “loopholes” and urged a pause on all EV credits.
Treasury also released a list of vehicles that are “currently eligible for a credit provided other requirements are met,” which is not entirely helpful because requirements are not clearly defined. Curiously, the rear-wheel-drive Volkswagen ID4 has a qualifying sticker price limit of $55,000 like a sedan while the all-wheel-drive version, also a five-seater, is treated as an SUV, with a commensurate $80,000 limit.
From our view, the feds appear to be in over their heads as they try to figure out how to implement the new rules. Maybe Congress’ byzantine conditions for the EV credits are to blame, or maybe Treasury has dropped the ball — or maybe it’s both.