[House Report 118-550]
[From the U.S. Government Publishing Office]


118th Congress }                                          { Report 
                        HOUSE OF REPRESENTATIVES
  2d Session   }                                          { 118-550

======================================================================
 
               END CHINESE DOMINANCE OF ELECTRIC VEHICLES IN 
                              AMERICA ACT OF 2024

                                _______
                                

 June 11, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Missouri, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 7980]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 7980) to amend the Internal Revenue Code of 1986 to 
exclude vehicles the batteries of which contain materials 
sourced from prohibited foreign entities from the clean vehicle 
credit, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................3
          A. Purpose and Summary.................................     3
          B. Background and Need for Legislation.................     3
          C. Legislative History.................................     4
            Background...........................................     4
            Committee Hearings...................................     4
            Committee Action.....................................     4
          D. Designated Hearing..................................     4
 II. EXPLANATION OF THE BILL..........................................4
          A. Exclusion from Clean Vehicle Credit of Vehicles 
              Containing Materials Sourced from Prohibited 
              Foreign Entities (sec. 2 of the bill and sec. 30D 
              of the Code).......................................     4
          B. Explanation of Provision............................     8
          C. Effective Date......................................     9
III. VOTES OF THE COMMITTEE...........................................9
 IV. BUDGET EFFECTS OF THE BILL.......................................9
          A. Committee Estimate of Budgetary Effects.............     9
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     9
  V. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE........9
 VI. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......13
          A. Committee Oversight Findings and Recommendations....    13
          B. Statement of General Performance Goals and 
              Objectives.........................................    13
          C. Information Relating to Unfunded Mandates...........    13
          D. Applicability of House Rules XXI, Clause 5(b).......    13
          E. Tax Complexity Analysis.............................    13
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    13
          G. Duplication of Federal Programs.....................    14
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........14
VIII.DISSENTING VIEWS................................................23


    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``End Chinese Dominance of Electric 
Vehicles in America Act of 2024''.

SEC. 2. EXCLUSION FROM CLEAN VEHICLE CREDIT OF VEHICLES CONTAINING 
                    MATERIALS SOURCED FROM PROHIBITED FOREIGN ENTITIES.

  (a) In General.--Section 30D(d)(7) of the Internal Revenue Code of 
1986 is amended to read as follows:
          ``(7) Excluded entities.--
                  ``(A) In general.--For purposes of this section, the 
                term `new clean vehicle' shall not include any 
                vehicle--
                          ``(i) with respect to which any of the 
                        components contained in the drive battery or 
                        any material contained in such a component was 
                        extracted, processed, recycled, manufactured, 
                        or assembled by a prohibited foreign entity, or
                          ``(ii) the drive battery of which is 
                        designed, manufactured, or produced using any 
                        process attributable to any licensing, royalty, 
                        service, or similar agreement with a prohibited 
                        foreign entity the estimated total contract 
                        cost, including variable, contingent, or sales-
                        based payments, of which exceeds $5,000,000.
                  ``(B) Prohibited foreign entity.--For purposes of 
                subparagraph (A), the term `prohibited foreign entity' 
                means--
                          ``(i) any foreign entity of concern (as 
                        defined in section 40207(a)(5) of the 
                        Infrastructure Investment and Jobs Act),
                          ``(ii) any entity with respect to which the 
                        government of a covered nation has the right or 
                        power (directly or indirectly) to appoint or 
                        approve the appointment of a covered officer, 
                        or
                          ``(iii) any entity 25 percent or more of the 
                        capital or profits interests of which are owned 
                        (directly or indirectly) in the aggregate by 1 
                        or more of the following:
                                  ``(I) A covered nation or an entity 
                                described in clause (i) or (ii).
                                  ``(II) A citizen, national, or 
                                resident of a covered nation.
                                  ``(III) An entity organized under the 
                                laws of a covered nation.
                  ``(C) Covered officer.--For purposes of this 
                paragraph, the term `covered officer' means--
                          ``(i) any member of the board of directors, 
                        board of supervisors, or an equivalent 
                        governing body,
                          ``(ii) the president, senior vice president, 
                        chief executive officer, chief operating 
                        officer, chief financial officer, or general 
                        counsel, or
                          ``(iii) any individual who performs duties 
                        usually associated with a title listed in 
                        clause (i) or (ii).
                  ``(D) Covered nation.--For purposes of this 
                paragraph, the term `covered nation' has the meaning 
                given such term in section 4872(d) of title 10, United 
                States Code.
                  ``(E) Drive battery.--For purposes of this paragraph, 
                the term `drive battery' means, with respect to a 
                vehicle, the battery from which the electric motor of 
                such vehicle draws electricity.''.
  (b) Effective Date.--The amendment made by this section shall apply 
to vehicles placed in service after the date of enactment of this Act.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 7980, the ``End Chinese Dominance of 
Electric Vehicles in America Act of 2024,'' as ordered reported 
by the Committee on Ways and Means on April 17, 2024. The 
purpose of the bill is to prevent the Chinese Communist Party 
from receiving a windfall by closing the Chinese billionaire 
loophole and ensuring that Treasury follows the same definition 
of FEOC developed by the Commerce Department and to expand the 
FEOC limitations to prevent batteries designed, manufactured, 
or produced using any process attributable to any licensing, 
royalty, service contract, or similar agreements with a 
prohibited entity from being eligible for the credit.

                 B. Background and Need for Legislation

    The Inflation Reduction Act (IRA) created generous new tax 
subsidies for electric vehicles (EVs), at an enormous cost to 
the taxpayer. While drafting the IRA, an attempt was made to 
prevent those subsidies from going to foreign entities of 
concern (FEOC), including entities with ties to China or other 
adversaries. Pushed by radical environmentalists and some EV 
producers, the Biden Administration wrote lenient FEOC rules 
that benefit China.
    Under the IRA, EVs are ineligible for a tax subsidy if they 
contain battery components or critical minerals sourced from an 
FEOC. This follows a similar restriction on semiconductor 
grants included in the CHIPs and Science Act signed by 
President. . . . Biden.
    In September 2023, the Commerce Department issued rules 
under the CHIPs Act that defined an FEOC as follows: 25 percent 
or more of the entity's voting interest, or board seats, or 
equity interest is held directly or indirectly by the 
government of a country of concern (China, Russia, North Korea, 
or Iran) or its officials, or by any person that is a citizen, 
national, or resident of such country.
    In December 2023, Treasury issued similar FEOC rules for 
the EV tax subsidies but opted to make their version more 
China-favorable than the Commerce Department rule. Treasury 
excluded ``any person that is a citizen, national, or 
resident''--so an entity owned by a wealthy foreign national 
could benefit from the EV subsidies as long as his or her ties 
to the Chinese Communist Party or other hostile government were 
unofficial.
    Treasury also defined ``battery component'' very favorably 
to Chinese manufacturers, who can produce all materials and 
parts upstream of the battery component and still remain 
eligible to benefit from the EV tax subsidies.
    The drafters of the IRA EV subsidies failed to prevent FEOC 
entities from being the ultimate beneficiaries of the credits 
through licensing, services, or similar contracts that 
facilitate the same economic result as a joint venture.
    This legislation is needed to prevent the Chinese Communist 
Party from receiving a windfall by closing the Chinese 
billionaire loophole and ensuring that Treasury follows the 
same definition of FEOC developed by the Commerce Department.
    It also closes the Chinese manufacturing loophole by 
preventing China from leveraging its battery supply chain 
dominance to produce upstream materials and parts that are 
eligible for an EV tax subsidy in the United States.
    Finally, this legislation is needed to expand the FEOC 
limitations to prevent batteries designed, manufactured, or 
produced using any process attributable to any licensing, 
royalty, service contract, or similar agreements with a 
prohibited entity from being eligible for the credit.

                         C. Legislative History


Background

    H.R. 7980 was introduced on April 15, 2024, and was 
referred to the Committee on Ways and Means.

Committee Hearings

    The Committee on Ways and Means held the following hearings 
concerning the policy in H.R. 7980:
    On April 19, 2023, the Committee held a Hearing on the U.S. 
Tax Code Subsidizing Green Corporate Handouts and the Chinese 
Communist Party.
    On April 11, 2024, the Committee held a Hearing on 
Expanding on the Success of the 2017 Tax Relief to Help 
Hardworking Americans.

Committee Action

    The Committee on Ways and Means marked up H.R. 7980, the 
``End Chinese Dominance of Electric Vehicles in America Act of 
2024,'' on April 17, 2024, and ordered the bill, as amended, 
favorably reported (with a quorum being present).

                         D. Designated Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop and consider H.R. 7980:
    On April 11, 2024, the Committee held a Hearing on 
Expanding on the Success of the 2017 Tax Relief to Help 
Hardworking Americans.

                      II. EXPLANATION OF THE BILL


A. Exclusion from Clean Vehicle Credit of Vehicles Containing Materials 
 Sourced from Prohibited Foreign Entities (sec. 2 of the bill and sec. 
                            30D of the Code)


                              PRESENT LAW

In general

    Present law allows a credit for each new clean vehicle 
placed in service (the ``CV credit''). A new clean vehicle is a 
motor vehicle the original use of which commences with the 
taxpayer, is acquired for use or lease and not for resale, is 
made by a qualified manufacturer,\1\ has a gross vehicle weight 
rating of less than 14,000 pounds, is treated as a motor 
vehicle for purposes of title II of the Clean Air Act, and is 
propelled to a significant extent by an electric motor drawing 
electricity from a battery (1) with at least seven kilowatt-
hours of capacity and (2) which is capable of being recharged 
from an external source of electricity.\2\ The person who sells 
the vehicle must provide a report to the taxpayer and Secretary 
that includes the name and taxpayer identification number of 
the taxpayer, the vehicle identification number of the vehicle, 
the battery capacity of the vehicle, verification that original 
use of the vehicle commences with the taxpayer, and the maximum 
credit allowable to the taxpayer with respect to the 
vehicle.\3\ A new clean vehicle must have final assembly occur 
within North America.\4\
---------------------------------------------------------------------------
    \1\A qualified manufacturer must be a manufacturer as defined in 
regulations prescribed by the Administrator of the Environmental 
Protection Agency for purposes of the administration of title II of the 
Clean Air Act (42 U.S.C. sec. 7521 et seq.) and must provide periodic 
written reports to the Secretary which include vehicle identification 
numbers. Sec. 30D(d)(3). Unless otherwise stated, all section 
references are to the Internal Revenue Code of 1986, as amended.
    \2\Sec. 30D(d)(1).
    \3\Sec. 30D(d)(1)(H).
    \4\Sec. 30D(d)(1)(G).
---------------------------------------------------------------------------
    New qualified fuel cell motor vehicles\5\ which have final 
assembly within North America and for which sellers provide a 
report, as described above, are new clean vehicles for purposes 
of the credit.\6\
---------------------------------------------------------------------------
    \5\As defined in section 30B(b)(3).
    \6\Sec. 30D(d)(6).
---------------------------------------------------------------------------
    Vehicles with any applicable critical minerals in the 
battery that are extracted, processed, or recycled by a foreign 
entity of concern that are placed in service after December 31, 
2024 or vehicles with any components contained in the battery 
of the vehicle that are manufactured or assembled by a foreign 
entity of concern that are placed in service after December 31, 
2023 do not qualify for the credit.\7\
---------------------------------------------------------------------------
    \7\Sec. 30D(d)(7). Treasury and the U.S. Department of Energy have 
released proposed regulations on excluded entities for the clean 
vehicle credit and foreign entities of concern. See Notice of Proposed 
Rulemaking, 88 Fed. Reg. 84098, December 4, 2023, and Notice of 
Proposed Rulemaking, 88 Fed. Reg. 84082, December 4, 2023, 
respectively.
---------------------------------------------------------------------------
    A foreign entity of concern\8\ is a foreign entity that is 
(1) designated as a foreign terrorist organization by the 
Secretary of State, (2) included on the list of specially 
designated nationals and blocked persons maintained by the 
Office of Foreign Assets Control of the Department of the 
Treasury (``SDN list''), (3) owned by, controlled by, or 
subject to the jurisdiction or direction of the government of a 
covered nation,\9\ (4) alleged by the Attorney General to have 
been involved in activities for which a conviction was obtained 
under certain laws,\10\ or (5) determined by the Secretary of 
Energy, in consultation with the Secretary of Defense and the 
Director of National Intelligence, to be engaged in 
unauthorized conduct that is detrimental to the national 
security or foreign policy of the United States.
---------------------------------------------------------------------------
    \8\Foreign entity of concern as defined in 42 U.S.C. sec. 
18741(a)(5).
    \9\10 U.S.C. sec. 4872(d). Covered nation means the Democratic 
People's Republic of North Korea, the People's Republic of China, the 
Russian Federation, and the Islamic Republic of Iran.
    \10\42 U.S.C. sec. 18741(a)(5)(D).
---------------------------------------------------------------------------

CV credit amount

    A new clean vehicle is eligible for a maximum credit of up 
to $7,500 if certain requirements are met. One $3,750 amount is 
allowed if a critical minerals requirement for the battery is 
met.\11\ Another $3,750 amount is allowed if a battery 
components requirement is met.\12\
---------------------------------------------------------------------------
    \11\Sec. 30D(b)(2).
    \12\Sec. 30D(b)(3).
---------------------------------------------------------------------------
            Critical minerals requirement
    To satisfy the critical minerals requirement, a new clean 
vehicle's battery (from which the electric motor draws 
electricity) must have a percentage of the value of applicable 
critical minerals\13\ that were (1) extracted or processed in 
the United States or a country that has a free trade 
agreement\14\ with the United States or (2) recycled in North 
America equal to or greater than an applicable percentage.\15\
---------------------------------------------------------------------------
    \13\Critical minerals as defined in sec. 45X(c)(6).
    \14\Treasury has released proposed regulations on the clean vehicle 
credit which include interpreting free trade agreement. See Notice of 
Proposed Rulemaking, 88 Fed. Reg. 23370, April 17, 2023.
    \15\Sec. 30D(e)(1)(A).
---------------------------------------------------------------------------
    For this purpose the applicable percentage is 40 percent 
for a vehicle placed in service before January 1, 2024. The 
applicable percentage is 50 percent for a vehicle placed in 
service during calendar year 2024, 60 percent for 2025, 70 
percent for 2026, and 80 percent after 2026.\16\
---------------------------------------------------------------------------
    \16\Sec. 30D(e)(1)(B).
---------------------------------------------------------------------------
            Battery components requirement
    To satisfy the battery components requirement, a new clean 
vehicle's battery (from which the electric motor draws 
electricity) must have a percentage of the value of components 
that were manufactured or assembled in North America equal to 
or greater than an applicable percentage.\17\
---------------------------------------------------------------------------
    \17\Sec. 30D(e)(2)(A). This requirement is intended to incentivize 
the manufacturing or assembly of high value battery components, such as 
battery cells, in North America.
---------------------------------------------------------------------------
    For this purpose, the applicable percentage is 50 percent 
for a vehicle placed in service before January 1, 2024. The 
applicable percentage is 60 percent for a vehicle placed in 
service during calendar year 2024 or 2025, 70 percent for 2026, 
80 percent for 2027, 90 percent for 2028, and 100 percent after 
2028.\18\
---------------------------------------------------------------------------
    \18\Sec. 30D(e)(2)(B).
---------------------------------------------------------------------------
            Vehicle price and AGI limitations
    The provision requires that the manufacturer's suggested 
retail price (``MSRP'') of a new clean vehicle purchased by the 
taxpayer not exceed certain limitations. That is, the credit 
amount is $0 if the MSRP for the vehicle exceeds the applicable 
limitation. This limitation is $80,000 in the case of a van, 
sport utility vehicle, or pickup truck, and $55,000 in the case 
of any other vehicle. The Secretary is directed to release 
regulations or guidance to characterize vehicles into the 
appropriate category by applying rules similar to those 
employed by the Environmental Protection Agency (``EPA'') and 
the Department of Energy to determine vehicle class and 
size.\19\
---------------------------------------------------------------------------
    \19\Sec. 30D(f)(11). Treasury has released proposed regulations on 
the clean vehicle credit which include the determination of vehicle 
classifications. See Notice of Proposed Rulemaking, 88 Fed. Reg. 23370, 
April 17, 2023.
---------------------------------------------------------------------------
    Additionally, no credit is allowed if the taxpayer's income 
exceeds $300,000 in the case of a joint return or surviving 
spouse, $225,000 in the case of a head of household, or 
$150,000 in the case of any other taxpayer.\20\ For purposes of 
this limitation, the taxpayer's income is the lesser of 
modified AGI of the current taxable year or modified AGI of the 
preceding taxable year.\21\
---------------------------------------------------------------------------
    \20\Sec. 30D(f)(10).
    \21\Modified AGI is AGI increased by any amount excluded from gross 
income under section 911, 931, or 933. Sec. 30D(f)(10)(C).
---------------------------------------------------------------------------

Transfer of credit

    A taxpayer who has purchased or leased a vehicle may elect 
to transfer the credit to an eligible entity, subject to 
regulations or guidance the Secretary deems necessary.\22\ The 
eligible entity is then treated as the taxpayer with respect to 
the credit.\23\ The Secretary is directed to establish a 
program to provide advance payments of these credit amounts to 
eligible entities.\24\ An election to transfer the credit must 
be made on or before the date of vehicle purchase.\25\
---------------------------------------------------------------------------
    \22\Treasury has released proposed regulations on the transfer of 
clean vehicle credits. See Notice of Proposed Rulemaking, 88 Fed. Reg. 
70310, October 10, 2023.
    \23\Sec. 30D(g)(1).
    \24\Sec. 30D(g)(7).
    \25\Sec. 30D(g)(3).
---------------------------------------------------------------------------
    An eligible entity is a dealer\26\ which meets the 
following requirements: First, the dealer must be registered 
with the Secretary. Second, prior to the election of transfer, 
the dealer must disclose information to the buyer on the MSRP 
price of the vehicle, value of the credit or other incentives 
available, and the amount provided by the dealer as a condition 
of an election to transfer. Third, the dealer must pay the 
taxpayer for the amount of the credit allowable. Finally, the 
dealer must ensure that the availability or use of any other 
available manufacturer or dealer incentive does not limit the 
ability of the taxpayer to make an election and that the 
election will not limit the value or use of any such 
incentive.\27\ The Secretary may revoke the registration of 
dealers that fail to comply with these requirements.\28\
---------------------------------------------------------------------------
    \26\A dealer is a person licensed by a State, territory of the 
United States, Indian tribal government, or Alaska Native Corporation 
to engage in the sale of vehicles. Sec. 30D(g)(8).
    \27\Sec. 30D(g)(2).
    \28\Sec. 30D(g)(4).
---------------------------------------------------------------------------
    The payment made by dealers to buyers in connection with a 
credit transfer election is not includable in the gross income 
of the taxpayer and is not deductible to the dealer.\29\
---------------------------------------------------------------------------
    \29\Sec. 30D(g)(5).
---------------------------------------------------------------------------
    The tax liability of a taxpayer that does not meet the AGI 
requirements for the credit, that elects to transfer a credit, 
and that receives a payment in connection with such credit 
transfer, is increased by the amount of such payment.\30\
---------------------------------------------------------------------------
    \30\Sec. 30D(g)(10).
---------------------------------------------------------------------------

Other rules

    A vehicle that is predominantly used outside the United 
States does not qualify for the credit.\31\ A vehicle must meet 
certain emissions and safety standards in order to qualify for 
the credit.\32\
---------------------------------------------------------------------------
    \31\Sec. 30D(f)(4).
    \32\Sec. 30D(f)(7).
---------------------------------------------------------------------------
    The basis of any qualified vehicle is reduced by the amount 
of the credit.\33\ The portion of the credit attributable to 
vehicles of a character subject to an allowance for 
depreciation is treated as part of the general business credit; 
the nonbusiness portion of the credit is allowable to the 
extent of the excess of the regular tax and the alternative 
minimum tax (reduced by certain other credits) for the taxable 
year.\34\
---------------------------------------------------------------------------
    \33\Sec. 30D(f)(1).
    \34\Sec. 30D(c).
---------------------------------------------------------------------------
    Only one credit is allowed for each vehicle and a taxpayer 
must include the vehicle identification number of the vehicle 
on a tax return to claim the credit.\35\
---------------------------------------------------------------------------
    \35\Sec. 30D(f)(8) and (9).
---------------------------------------------------------------------------

Expiration

    No credit is allowed for any vehicle placed in service 
after December 31, 2032.\36\
---------------------------------------------------------------------------
    \36\Sec. 30D(h).
---------------------------------------------------------------------------

Reasons for change

    The Committee is concerned that America's foreign 
adversaries will take advantage of the new clean vehicle credit 
and potentially put domestic electric vehicle manufacturing at 
risk. To address this concern, the Committee intends to tighten 
existing rules to deny the credit to certain prohibited foreign 
entities that enter into any of a large variety of contractual 
arrangements with domestic manufacturers.

                      B. Explanation of Provision

    The provision modifies the requirements of the new clean 
vehicle credit. Vehicles that have any components contained in 
the drive battery or any material contained in such components 
that are extracted, processed, recycled, manufactured, or 
assembled by a prohibited foreign entity do not qualify for the 
credit.\37\ Additionally, vehicles that have a drive battery 
that is designed, manufactured, or produced using any process 
attributable to any licensing, royalty, service, or similar 
agreement with a prohibited foreign entity the estimated total 
contract cost, including variable, contingent, or sales-based 
payments, of which exceeds $5,000,000 do not qualify for the 
credit.
---------------------------------------------------------------------------
    \37\Including low-value minerals or battery materials for which the 
origin/source may be hard to trace.
---------------------------------------------------------------------------
    A drive battery is the battery from which the electric 
motor of a vehicle draws electricity.
    A prohibited foreign entity is (1) a foreign entity of 
concern, (2) an entity with respect to which the government of 
a covered nation has the right or power (directly or 
indirectly) to appoint or approve the appointment of a covered 
officer (``covered officer entity''), or (3) an entity 25 
percent or more of the capital or profits interests of which 
are owned (directly or indirectly) in the aggregate by one or 
more of: a covered nation, a foreign entity of concern, or a 
covered officer entity; a citizen, national, or resident of a 
covered nation; or an entity organized under the laws of a 
covered nation.
    A covered officer is (1) any member of the board of 
directors or supervisors, or an equivalent governing body, (2) 
the president, senior vice president, chief executive officer, 
chief operating officer, chief financial officer, or general 
counsel, or (3) other individuals who performs duties usually 
associated with such titles.

                           C. Effective Date

    The provision is effective for vehicles placed in service 
after date of enactment.

                      III. VOTES OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 7980, the ``End Chinese Dominance of 
Electric Vehicles in America Act of 2024,'' on April 17, 2024.
    The bill, H.R. 7980, the ``End Chinese Dominance of 
Electric Vehicles in America Act of 2024,'' as amended, was 
ordered favorably reported to the House of Representatives by a 
roll call vote of 22 yeas to 18 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
           Representative              Yea     Nay    Present       Representative       Yea     Nay    Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO).....................      X   ......  .........  Mr. Neal.............  ......      X   .........
Mr. Buchanan.......................      X   ......  .........  Mr. Doggett..........  ......      X   .........
Mr. Smith (NE).....................      X   ......  .........  Mr. Thompson.........  ......      X   .........
Mr. Kelly..........................      X   ......  .........  Mr. Larson...........  ......      X   .........
Mr. Schweikert.....................      X   ......  .........  Mr. Blumenauer.......  ......      X   .........
Mr. LaHood.........................  ......  ......  .........  Mr. Pascrell.........  ......      X   .........
Dr. Wenstrup.......................      X   ......  .........  Mr. Davis............  ......      X   .........
Mr. Arrington......................      X   ......  .........  Ms. Sanchez..........  ......      X   .........
Dr. Ferguson.......................      X   ......  .........  Ms. Sewell...........  ......      X   .........
Mr. Estes..........................      X   ......  .........  Ms. DelBene..........  ......      X   .........
Mr. Smucker........................      X   ......  .........  Ms. Chu..............  ......      X   .........
Mr. Hern...........................      X   ......  .........  Ms. Moore............  ......      X   .........
Ms. Miller.........................      X   ......  .........  Mr. Kildee...........  ......      X   .........
Dr. Murphy.........................  ......  ......  .........  Mr. Beyer............  ......      X   .........
Mr. Kustoff........................      X   ......  .........  Mr. Evans............  ......      X   .........
Mr. Fitzpatrick....................      X   ......  .........  Mr. Schneider........  ......      X   .........
Mr. Steube.........................  ......  ......  .........  Mr. Panetta..........  ......      X   .........
Ms. Tenney.........................      X   ......  .........  Mr. Gomez............  ......      X   .........
Mrs. Fischbach.....................      X   ......  .........
Mr. Moore..........................      X   ......  .........
Mrs. Steel.........................      X   ......  .........
Ms. Van Duyne......................      X   ......  .........
Mr. Feenstra.......................      X   ......  .........
Ms. Malliotakis....................      X   ......  .........
Mr. Carey..........................      X   ......  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 7980 as 
reported. The estimate prepared by the Congressional Budget 
Office (CBO) is included below.
    The bill is estimated to increase Federal fiscal year 
budget receipts by $660 million for the period 2024 through 
2034.

                                                  FISCAL YEARS
                                              [Millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                           2024-   2024-
  2024     2025    2026    2027    2028    2029    2030    2031    2032    2033    2034     29       34
---------------------------------------------------------------------------------------------------------
    22       22       2       6      16      47      77      88     103     124     154     114      660
----------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

      V. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.




    H.R. 7980 would amend the Internal Revenue Code to tighten 
eligibility requirements for the new clean-vehicle tax credit. 
The bill would specify that the credit could not be claimed for 
vehicles powered by a battery containing components or 
materials that have been extracted, processed, recycled, 
manufactured, or assembled by a prohibited foreign entity or 
designed, manufactured, or produced under contract with such an 
entity. H.R. 7980 would define prohibited foreign entity as a 
foreign entity of concern or one with ties to North Korea, 
China, Russia, or Iran.
    Under current law, starting in 2024, vehicles with battery 
components sourced from a foreign entity of concern are not 
eligible for the new clean-vehicle credit. Starting in 2025, 
vehicles with battery-critical minerals sourced from a foreign 
entity of concern are not eligible for tax credits.
    The Congressional Budget Act of 1974, as amended, 
stipulates that revenue estimates provided by the staff of the 
Joint Committee on Taxation (JCT) will be the official 
estimates for all tax legislation considered by the Congress. 
As such, CBO incorporates those estimates into its cost 
estimates of the effects of legislation. The estimates for the 
tax provisions of H.R. 7980, including the effects on direct 
spending, were provided by JCT.
    For this estimate, CBO and JCT assume that the bill will be 
enacted in fiscal year 2024.
    JCT estimates that enacting H.R. 7980 would increase 
revenues by $59 million over the 2024-2034 period and would 
decrease outlays by $601 million over the same period. The 
effect on outlays is large relative to revenues because most 
clean-vehicle tax credits are provided as advance payments to 
dealers.
    The costs of the legislation, detailed in Table 1, fall 
within budget function 270 (energy).

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 7980
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, millions of dollars--
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                 2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034    2024-2029   2024-2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Decreases in Direct Spending
 
Estimated Budget Authority...      -20      -20       -2       -5      -14      -42      -70      -79      -93     -117     -139        -103        -601
Estimated Outlays............      -20      -20       -2       -5      -14      -42      -70      -79      -93     -117     -139        -103        -601
 
                                                                  Increases in Revenues
 
Estimated Revenues...........        2        2        *        1        2        5        7        9       10        7       15          11          59
 
                                        Net Decrease in the DeficitPFrom Changes in Direct Spending and Revenues
 
Effect on the Deficit........      -22      -22       -2       -6      -16      -47      -77      -88     -103     -124     -154        -114        -660
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; * = between zero and $500,000.

    The CBO staff contact for this estimate is Molly Sherlock. 
The estimate was reviewed by John McClelland, Director of Tax 
Analysis and H. Samuel Papenfuss, Deputy Director of Budget 
Analysis.

                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

     VI. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the Committee made findings and 
recommendations that are reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill does not authorize funding, so no statement of general 
performance goals and objectives is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

            D. Applicability of House Rules XXI, Clause 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
provide such a Federal income tax increase.

                       E. Tax Complexity Analysis

    The Joint Committee on Taxation has determined that this 
legislation does not meet the threshold for a tax complexity 
analysis.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

            SECTION 30D OF THE INTERNAL REVENUE CODE OF 1986


SEC. 30D. CLEAN VEHICLE CREDIT.

  (a) Allowance of credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an 
amount equal to the sum of the credit amounts determined under 
subsection (b) with respect to each new clean vehicle placed in 
service by the taxpayer during the taxable year.
  (b) Per vehicle dollar limitation.--
          (1) In general.--The amount determined under this 
        subsection with respect to any new clean vehicle is the 
        sum of the amounts determined under paragraphs (2) and 
        (3) with respect to such vehicle.
          (2) Critical minerals.--In the case of a vehicle with 
        respect to which the requirement described in 
        subsection (e)(1)(A) is satisfied, the amount 
        determined under this paragraph is $3,750.
          (3) Battery components.--In the case of a vehicle 
        with respect to which the requirement described in 
        subsection (e)(2)(A) is satisfied, the amount 
        determined under this paragraph is $3,750.
  (c) Application with other credits.--
          (1) Business credit treated as part of general 
        business credit.--So much of the credit which would be 
        allowed under subsection (a) for any taxable year 
        (determined without regard to this subsection) that is 
        attributable to property of a character subject to an 
        allowance for depreciation shall be treated as a credit 
        listed in section 38(b) for such taxable year (and not 
        allowed under subsection (a)).
          (2) Personal credit.--For purposes of this title, the 
        credit allowed under subsection (a) for any taxable 
        year (determined after application of paragraph (1)) 
        shall be treated as a credit allowable under subpart A 
        for such taxable year.
  (d) New clean vehicle.--For purposes of this section--
          (1) In general.--The term ``new clean vehicle'' means 
        a motor vehicle--
                  (A) the original use of which commences with 
                the taxpayer,
                  (B) which is acquired for use or lease by the 
                taxpayer and not for resale,
                  (C) which is made by a qualified 
                manufacturer,
                  (D) which is treated as a motor vehicle for 
                purposes of title II of the Clean Air Act,
                  (E) which has a gross vehicle weight rating 
                of less than 14,000 pounds,
                  (F) which is propelled to a significant 
                extent by an electric motor which draws 
                electricity from a battery which--
                          (i) has a capacity of not less than 7 
                        kilowatt hours, and
                          (ii) is capable of being recharged 
                        from an external source of electricity,
                  (G) the final assembly of which occurs within 
                North America, and
                  (H) for which the person who sells any 
                vehicle to the taxpayer furnishes a report to 
                the taxpayer and to the Secretary, at such time 
                and in such manner as the Secretary shall 
                provide, containing--
                          (i) the name and taxpayer 
                        identification number of the taxpayer,
                          (ii) the vehicle identification 
                        number of the vehicle, unless, in 
                        accordance with any applicable rules 
                        promulgated by the Secretary of 
                        Transportation, the vehicle is not 
                        assigned such a number,
                          (iii) the battery capacity of the 
                        vehicle,
                          (iv) verification that original use 
                        of the vehicle commences with the 
                        taxpayer,
                          (v) the maximum credit under this 
                        section allowable to the taxpayer with 
                        respect to the vehicle, and
                          (vi) in the case of a taxpayer who 
                        makes an election under subsection 
                        (g)(1), any amount described in 
                        subsection (g)(2)(C) which has been 
                        provided to such taxpayer.
          (2) Motor vehicle.--The term ``motor vehicle'' means 
        any vehicle which is manufactured primarily for use on 
        public streets, roads, and highways (not including a 
        vehicle operated exclusively on a rail or rails) and 
        which has at least 4 wheels.
          (3) Qualified manufacturer.--The term ``qualified 
        manufacturer'' means any manufacturer (within the 
        meaning of the regulations prescribed by the 
        Administrator of the Environmental Protection Agency 
        for purposes of the administration of title II of the 
        Clean Air Act (42 U.S.C. 7521 et seq.)) which enters 
        into a written agreement with the Secretary under which 
        such manufacturer agrees to make periodic written 
        reports to the Secretary (at such times and in such 
        manner as the Secretary may provide) providing vehicle 
        identification numbers and such other information 
        related to each vehicle manufactured by such 
        manufacturer as the Secretary may require.
          (4) Battery capacity.--The term ``capacity'' means, 
        with respect to any battery, the quantity of 
        electricity which the battery is capable of storing, 
        expressed in kilowatt hours, as measured from a 100 
        percent state of charge to a 0 percent state of charge.
          (5) Final assembly.--For purposes of paragraph 
        (1)(G), the term ``final assembly'' means the process 
        by which a manufacturer produces a new clean vehicle 
        at, or through the use of, a plant, factory, or other 
        place from which the vehicle is delivered to a dealer 
        or importer with all component parts necessary for the 
        mechanical operation of the vehicle included with the 
        vehicle, whether or not the component parts are 
        permanently installed in or on the vehicle.
          (6) New qualified fuel cell motor vehicle.--For 
        purposes of this section, the term ``new clean 
        vehicle'' shall include any new qualified fuel cell 
        motor vehicle (as defined in section 30B(b)(3)) which 
        meets the requirements under subparagraphs (G) and (H) 
        of paragraph (1).
          [(7) Excluded entities.--For purposes of this 
        section, the term ``new clean vehicle'' shall not 
        include--
                  [(A) any vehicle placed in service after 
                December 31, 2024, with respect to which any of 
                the applicable critical minerals contained in 
                the battery of such vehicle (as described in 
                subsection (e)(1)(A)) were extracted, 
                processed, or recycled by a foreign entity of 
                concern (as defined in section 40207(a)(5) of 
                the Infrastructure Investment and Jobs Act (42 
                U.S.C. 18741(a)(5))), or
                  [(B) any vehicle placed in service after 
                December 31, 2023, with respect to which any of 
                the components contained in the battery of such 
                vehicle (as described in subsection (e)(2)(A)) 
                were manufactured or assembled by a foreign 
                entity of concern (as so defined).]
          (7) Excluded entities.--
                  (A) In general.--For purposes of this 
                section, the term ``new clean vehicle'' shall 
                not include any vehicle--
                          (i) with respect to which any of the 
                        components contained in the drive 
                        battery or any material contained in 
                        such a component was extracted, 
                        processed, recycled, manufactured, or 
                        assembled by a prohibited foreign 
                        entity, or
                          (ii) the drive battery of which is 
                        designed, manufactured, or produced 
                        using any process attributable to any 
                        licensing, royalty, service, or similar 
                        agreement with a prohibited foreign 
                        entity the estimated total contract 
                        cost, including variable, contingent, 
                        or sales-based payments, of which 
                        exceeds $5,000,000.
                  (B) Prohibited foreign entity.--For purposes 
                of subparagraph (A), the term ``prohibited 
                foreign entity'' means--
                          (i) any foreign entity of concern (as 
                        defined in section 40207(a)(5) of the 
                        Infrastructure Investment and Jobs 
                        Act),
                          (ii) any entity with respect to which 
                        the government of a covered nation has 
                        the right or power (directly or 
                        indirectly) to appoint or approve the 
                        appointment of a covered officer, or
                          (iii) any entity 25 percent or more 
                        of the capital or profits interests of 
                        which are owned (directly or 
                        indirectly) in the aggregate by 1 or 
                        more of the following:
                                  (I) A covered nation or an 
                                entity described in clause (i) 
                                or (ii).
                                  (II) A citizen, national, or 
                                resident of a covered nation.
                                  (III) An entity organized 
                                under the laws of a covered 
                                nation.
                  (C) Covered officer.--For purposes of this 
                paragraph, the term ``covered officer'' means--
                          (i) any member of the board of 
                        directors, board of supervisors, or an 
                        equivalent governing body,
                          (ii) the president, senior vice 
                        president, chief executive officer, 
                        chief operating officer, chief 
                        financial officer, or general counsel, 
                        or
                          (iii) any individual who performs 
                        duties usually associated with a title 
                        listed in clause (i) or (ii).
                  (D) Covered nation.--For purposes of this 
                paragraph, the term ``covered nation'' has the 
                meaning given such term in section 4872(d) of 
                title 10, United States Code.
                  (E) Drive battery.--For purposes of this 
                paragraph, the term ``drive battery'' means, 
                with respect to a vehicle, the battery from 
                which the electric motor of such vehicle draws 
                electricity.
  (e) Critical mineral and battery component requirements.--
          (1) Critical minerals requirement.--
                  (A) In general.--The requirement described in 
                this subparagraph with respect to a vehicle is 
                that, with respect to the battery from which 
                the electric motor of such vehicle draws 
                electricity, the percentage of the value of the 
                applicable critical minerals (as defined in 
                section 45X(c)(6)) contained in such battery 
                that were--
                          (i) extracted or processed--
                                  (I) in the United States, or
                                  (II) in any country with 
                                which the United States has a 
                                free trade agreement in effect, 
                                or
                          (ii) recycled in North America,
                is equal to or greater than the applicable 
                percentage (as certified by the qualified 
                manufacturer, in such form or manner as 
                prescribed by the Secretary).
                  (B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage 
                shall be--
                          (i) in the case of a vehicle placed 
                        in service after the date on which the 
                        proposed guidance described in 
                        paragraph (3)(B) is issued by the 
                        Secretary and before January 1, 2024, 
                        40 percent,
                          (ii) in the case of a vehicle placed 
                        in service during calendar year 2024, 
                        50 percent,
                          (iii) in the case of a vehicle placed 
                        in service during calendar year 2025, 
                        60 percent,
                          (iv) in the case of a vehicle placed 
                        in service during calendar year 2026, 
                        70 percent, and
                          (v) in the case of a vehicle placed 
                        in service after December 31, 2026, 80 
                        percent.
          (2) Battery components.--
                  (A) In general.--The requirement described in 
                this subparagraph with respect to a vehicle is 
                that, with respect to the battery from which 
                the electric motor of such vehicle draws 
                electricity, the percentage of the value of the 
                components contained in such battery that were 
                manufactured or assembled in North America is 
                equal to or greater than the applicable 
                percentage (as certified by the qualified 
                manufacturer, in such form or manner as 
                prescribed by the Secretary).
                  (B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage 
                shall be--
                          (i) in the case of a vehicle placed 
                        in service after the date on which the 
                        proposed guidance described in 
                        paragraph (3)(B) is issued by the 
                        Secretary and before January 1, 2024, 
                        50 percent,
                          (ii) in the case of a vehicle placed 
                        in service during calendar year 2024 or 
                        2025, 60 percent,
                          (iii) in the case of a vehicle placed 
                        in service during calendar year 2026, 
                        70 percent,
                          (iv) in the case of a vehicle placed 
                        in service during calendar year 2027, 
                        80 percent,
                          (v) in the case of a vehicle placed 
                        in service during calendar year 2028, 
                        90 percent,
                          (vi) in the case of a vehicle placed 
                        in service after December 31, 2028, 100 
                        percent.
          (3) Regulations and guidance.--
                  (A) In general.--The Secretary shall issue 
                such regulations or other guidance as the 
                Secretary determines necessary to carry out the 
                purposes of this subsection, including 
                regulations or other guidance which provides 
                for requirements for recordkeeping or 
                information reporting for purposes of 
                administering the requirements of this 
                subsection.
                  (B) Deadline for proposed guidance.--Not 
                later than December 31, 2022, the Secretary 
                shall issue proposed guidance with respect to 
                the requirements under this subsection.
  (f) Special rules.--
          (1) Basis reduction.--For purposes of this subtitle, 
        the basis of any property for which a credit is 
        allowable under subsection (a) shall be reduced by the 
        amount of such credit so allowed (determined without 
        regard to subsection (c)).
          (2) No double benefit.--The amount of any deduction 
        or other credit allowable under this chapter for a 
        vehicle for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of credit 
        allowed under such subsection for such vehicle 
        (determined without regard to subsection (c)).
          (4) Property used outside United States not 
        qualified.--No credit shall be allowable under 
        subsection (a) with respect to any property referred to 
        in section 50(b)(1).
          (5) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit 
        allowable under subsection (a) with respect to any 
        property which ceases to be property eligible for such 
        credit.
          (6) Election not to take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the 
        taxpayer elects to not have this section apply to such 
        vehicle.
          (7) Interaction with air quality and motor vehicle 
        safety standards.--A vehicle shall not be considered 
        eligible for a credit under this section unless such 
        vehicle is in compliance with--
                  (A) the applicable provisions of the Clean 
                Air Act for the applicable make and model year 
                of the vehicle (or applicable air quality 
                provisions of State law in the case of a State 
                which has adopted such provision under a waiver 
                under section 209(b) of the Clean Air Act), and
                  (B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, 
                United States Code.
          (8) One credit per vehicle.--In the case of any 
        vehicle, the credit described in subsection (a) shall 
        only be allowed once with respect to such vehicle, as 
        determined based upon the vehicle identification number 
        of such vehicle, including any vehicle with respect to 
        which the taxpayer elects the application of subsection 
        (g).
          (9) VIN requirement.--No credit shall be allowed 
        under this section with respect to any vehicle unless 
        the taxpayer includes the vehicle identification number 
        of such vehicle on the return of tax for the taxable 
        year.
          (10) Limitation based on modified adjusted gross 
        income.--
                  (A) In general.--No credit shall be allowed 
                under subsection (a) for any taxable year if--
                          (i) the lesser of--
                                  (I) the modified adjusted 
                                gross income of the taxpayer 
                                for such taxable year, or
                                  (II) the modified adjusted 
                                gross income of the taxpayer 
                                for the preceding taxable year, 
                                exceeds
                          (ii) the threshold amount.
                  (B) Threshold amount.--For purposes of 
                subparagraph (A)(ii), the threshold amount 
                shall be--
                          (i) in the case of a joint return or 
                        a surviving spouse (as defined in 
                        section 2(a)), $300,000,
                          (ii) in the case of a head of 
                        household (as defined in section 2(b)), 
                        $225,000, and
                          (iii) in the case of a taxpayer not 
                        described in clause (i) or (ii), 
                        $150,000.
                  (C) Modified adjusted gross income.--For 
                purposes of this paragraph, the term ``modified 
                adjusted gross income'' means adjusted gross 
                income increased by any amount excluded from 
                gross income under section 911, 931, or 933.
          (11) Manufacturer's suggested retail price 
        limitation.--
                  (A) In general.--No credit shall be allowed 
                under subsection (a) for a vehicle with a 
                manufacturer's suggested retail price in excess 
                of the applicable limitation.
                  (B) Applicable limitation.--For purposes of 
                subparagraph (A), the applicable limitation for 
                each vehicle classification is as follows:
                          (i) Vans.--In the case of a van, 
                        $80,000.
                          (ii) Sport utility vehicles.--In the 
                        case of a sport utility vehicle, 
                        $80,000.
                          (iii) Pickup trucks.--In the case of 
                        a pickup truck, $80,000.
                          (iv) Other.--In the case of any other 
                        vehicle, $55,000.
                  (C) Regulations and guidance.--For purposes 
                of this paragraph, the Secretary shall 
                prescribe such regulations or other guidance as 
                the Secretary determines necessary for 
                determining vehicle classifications using 
                criteria similar to that employed by the 
                Environmental Protection Agency and the 
                Department of the Energy to determine size and 
                class of vehicles.
  (g) Transfer of credit.--
          (1) In general.--Subject to such regulations or other 
        guidance as the Secretary determines necessary, if the 
        taxpayer who acquires a new clean vehicle elects the 
        application of this subsection with respect to such 
        vehicle, the credit which would (but for this 
        subsection) be allowed to such taxpayer with respect to 
        such vehicle shall be allowed to the eligible entity 
        specified in such election (and not to such taxpayer).
          (2) Eligible entity.--For purposes of this 
        subsection, the term ``eligible entity'' means, with 
        respect to the vehicle for which the credit is allowed 
        under subsection (a), the dealer which sold such 
        vehicle to the taxpayer and has--
                  (A) subject to paragraph (4), registered with 
                the Secretary for purposes of this paragraph, 
                at such time, and in such form and manner, as 
                the Secretary may prescribe,
                  (B) prior to the election described in 
                paragraph (1) and not later than at the time of 
                such sale, disclosed to the taxpayer purchasing 
                such vehicle--
                          (i) the manufacturer's suggested 
                        retail price,
                          (ii) the value of the credit allowed 
                        and any other incentive available for 
                        the purchase of such vehicle, and
                          (iii) the amount provided by the 
                        dealer to such taxpayer as a condition 
                        of the election described in paragraph 
                        (1),
                  (C) not later than at the time of such sale, 
                made payment to such taxpayer (whether in cash 
                or in the form of a partial payment or down 
                payment for the purchase of such vehicle) in an 
                amount equal to the credit otherwise allowable 
                to such taxpayer, and
                  (D) with respect to any incentive otherwise 
                available for the purchase of a vehicle for 
                which a credit is allowed under this section, 
                including any incentive in the form of a rebate 
                or discount provided by the dealer or 
                manufacturer, ensured that--
                          (i) the availability or use of such 
                        incentive shall not limit the ability 
                        of a taxpayer to make an election 
                        described in paragraph (1), and
                          (ii) such election shall not limit 
                        the value or use of such incentive.
          (3) Timing.--An election described in paragraph (1) 
        shall be made by the taxpayer not later than the date 
        on which the vehicle for which the credit is allowed 
        under subsection (a) is purchased.
          (4) Revocation of registration.--Upon determination 
        by the Secretary that a dealer has failed to comply 
        with the requirements described in paragraph (2), the 
        Secretary may revoke the registration (as described in 
        subparagraph (A) of such paragraph) of such dealer.
          (5) Tax treatment of payments.--With respect to any 
        payment described in paragraph (2)(C), such payment--
                  (A) shall not be includible in the gross 
                income of the taxpayer, and
                  (B) with respect to the dealer, shall not be 
                deductible under this title.
          (6) Application of certain other requirements.--In 
        the case of any election under paragraph (1) with 
        respect to any vehicle--
                  (A) the requirements of paragraphs (1) and 
                (2) of subsection (f) shall apply to the 
                taxpayer who acquired the vehicle in the same 
                manner as if the credit determined under this 
                section with respect to such vehicle were 
                allowed to such taxpayer,
                  (B) paragraph (6) of such subsection shall 
                not apply, and
                  (C) the requirement of paragraph (9) of such 
                subsection (f) shall be treated as satisfied if 
                the eligible entity provides the vehicle 
                identification number of such vehicle to the 
                Secretary in such manner as the Secretary may 
                provide.
          (7) Advance payment to registered dealers.--
                  (A) In general.--The Secretary shall 
                establish a program to make advance payments to 
                any eligible entity in an amount equal to the 
                cumulative amount of the credits allowed under 
                subsection (a) with respect to any vehicles 
                sold by such entity for which an election 
                described in paragraph (1) has been made.
                  (B) Excessive payments.--Rules similar to the 
                rules of section 6417(d)(6) shall apply for 
                purposes of this paragraph.
                  (C) Treatment of advance payments.--For 
                purposes of section 1324 of title 31, United 
                States Code, the payments under subparagraph 
                (A) shall be treated in the same manner as a 
                refund due from a credit provision referred to 
                in subsection (b)(2) of such section.
          (8) Dealer.--For purposes of this subsection, the 
        term ``dealer'' means a person licensed by a State, the 
        District of Columbia, the Commonwealth of Puerto Rico, 
        any other territory or possession of the United States, 
        an Indian tribal government, or any Alaska Native 
        Corporation (as defined in section 3 of the Alaska 
        Native Claims Settlement Act (43 U.S.C. 1602(m)) to 
        engage in the sale of vehicles.
          (9) Indian tribal government.--For purposes of this 
        subsection, the term ``Indian tribal government'' means 
        the recognized governing body of any Indian or Alaska 
        Native tribe, band, nation, pueblo, village, community, 
        component band, or component reservation, individually 
        identified (including parenthetically) in the list 
        published most recently as of the date of enactment of 
        this subsection pursuant to section 104 of the 
        Federally Recognized Indian Tribe List Act of 1994 (25 
        U.S.C. 5131).
          (10) Recapture.--In the case of any taxpayer who has 
        made an election described in paragraph (1) with 
        respect to a new clean vehicle and received a payment 
        described in paragraph (2)(C) from an eligible entity, 
        if the credit under subsection (a) would otherwise (but 
        for this subsection) not be allowable to such taxpayer 
        pursuant to the application of subsection (f)(10), the 
        tax imposed on such taxpayer under this chapter for the 
        taxable year in which such vehicle was placed in 
        service shall be increased by the amount of the payment 
        received by such taxpayer.
  (h) Termination.--No credit shall be allowed under this 
section with respect to any vehicle placed in service after 
December 31, 2032.

                         VIII. DISSENTING VIEWS

                          House of Representatives,
                               Committee on Ways and Means,
                                    Washington, DC, April 10, 2024.

DISSENTING VIEWS ON THE AMENDMENT IN THE NATURE OF A SUBSTITUTE TO H.R. 
  7980, THE END CHINESE DOMINANCE OF ELECTRIC VEHICLES IN AMERICA ACT

    The Inflation Reduction Act of 2022 revamped and 
revitalized the clean vehicle credit to incentivize lower- and 
middle-income Americans to purchase and use new clean vehicles; 
promote resilient supply chains and domestic manufacturing; 
strengthen supply chains with trusted trading partners; and 
significantly reduce carbon emissions.
    In implementing this important legislation through its 
electric vehicle credits guidance, the Administration struck a 
prudent balance between these competing goals. American 
manufacturers are responding. In fact, a recent report 
assessing domestic and international supply chains of critical 
battery materials found that, as of January 2024, 663 
facilities across the battery supply chain are in various 
stages of development across the U.S., including 79 facilities 
for electrode and cell manufacturing and 63 facilities for 
battery-grade components manufacturing.\1\
---------------------------------------------------------------------------
    \1\Argonne National Laboratory, Securing Critical Materials for the 
U.S. Electric Vehicle Industry, February 2024.
---------------------------------------------------------------------------
    Republicans cannot deny the success of the Inflation 
Reduction Act in bringing these manufacturing facilities back 
to the United States. Indeed, this legislation is not a serious 
attempt at modifying the electric vehicles credit rules and 
gives no consideration balancing the interests at play. If 
Republicans were genuinely interested in reforming the electric 
vehicles credit, they would not have made multiple attempts to 
repeal it altogether prior to this markup.
            Sincerely,
                                           Richard E. Neal,
                                                    Ranking Member.

 CONGRESSMAN DONALD S. BEYER, JR., COMMITTEE ON WAYS AND MEANS, MARKUP 
                              OF H.R. 7980

    Thank you, Mr. Chairman and Ranking Member Neal.
    Through the Inflation Reduction Act, President Biden, in 
partnership with Congressional Democrats, has made enormous 
progress in tackling climate change and spurred a boom in U.S. 
manufacturing, increasing wages, and creating over 270,000 
high-quality jobs across the nation.
    Treasury's proposed guidance that is at issue here strikes 
the right balance between accelerating the electrification of 
our passenger vehicle fleet, while also ensuring that U.S. 
workers and manufacturers lead the global transition to EVs.
    Under President Biden's watch, EV sales have more than 
quadrupled, with over 4.5 million EVs currently on our roads. 
At that pace of acceleration, EVs are on track to make up half 
of new car sales by 2026, which is leading to a meaningful 
decline in our annual emissions and will make our economy far 
less vulnerable to global energy shocks.
    While the EV market dramatically has expanded, the domestic 
EV supply chain has grown along with it.
    The IRA turbocharged manufacturing and assembly of electric 
vehicles, battery fabrication, and mining and processing of 
critical minerals here at home. Over the last two years, nearly 
$100 billion in private-sector investment has been announced 
across the U.S. electric vehicle and battery supply chains.
    As of January 2024, 663 facilities throughout the battery 
supply chain are in various stages of development across the 
U.S., and production is expected to grow 28 times over by 2032 
from 2021 levels.
    The investments encouraged by the IRA are projected to 
create over 800,000 new, green jobs across the nation.
    I understand the intent of the legislation before us and am 
encouraged that my Republican friends have moved from trying to 
repeal the IRA in its entirety and to block the benefits that 
are flowing to American workers and families.
    It is an indication that while it took some time, my 
colleagues have begun to appreciate that many of the facilities 
springing up around the country due to the IRA and the jobs 
that stem from them are located in their own districts.
    However, if enacted, this bill would materially slow the EV 
transition and set us back on meeting our climate goals, 
without doing much, if anything, to encourage additional 
domestic manufacturing.
    Pulling the rug out from under the broader EV ecosystem by 
enacting this draconian measure will not hurt China--we will 
only hurt ourselves.
    I urge my colleagues to oppose this bill.
            Thank you.
                                      Donald S. Beyer, Jr.,
                                                Member of Congress.

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