Congress is preparing to vote on battery-electric-vehicle tax credits that favor both the Detroit 3 automakers and the United Auto Workers, whose members work at their plants, amid vocal opposition by foreign manufacturers, foreign governments and Republicans.
At issue are provisions in the House version of the Biden Admin.-backed Build Back Better Act that offer $8,000 in tax credits for BEV purchases – and an additional $4,500 credit for BEVs built by UAW members in Ford, General Motors and Stellantis plants in the U.S.
The House plan includes a $500 tax credit for U.S.-made EV batteries and restricts the $12,500 tax credit to U.S.-built vehicles starting in 2027.
The Senate proposals would grant $2,500 tax credits for BEVs made at U.S.-based plants and $2,500 to those whose members are represented by the UAW.
With a House vote expected soon, representatives of foreign-owned and non-union manufacturers, as well as the Canadian and Mexican governments, are pushing for changes to the tax-credit packages under discussion.
Speaking to Wards, Jennifer Safavian, president and CEO of Autos Drive America, which represents 12 foreign-owned automakers operating in the U.S., branded the credit as “discriminatory” and a potential damper on BEV sales. She claims limiting the full credit to models made in unionized U.S. plants would reduce consumer choice and sales. Currently only the Chevrolet Bolt and Chevrolet Bolt EUV are made with UAW labor in U.S. plants, although more are on the way, including the Ford F-150 Lightning, Cadillac Lyriq, GMC Hummer and Chevrolet Silverado BEV.
“If you are trying to persuade consumers to buy electric vehicles, that’s not the way to do it,” she tells Wards. “We believe tax credits are beneficial in helping more consumers switch over to a new electric vehicle.” The nascent BEV market currently is hampered by consumer concerns about the cost and range of electric vehicles and a lack of recharging infrastructure, Safavian says, which a restricted tax credit would do little to allay.
Private investment into enough recharging units to encourage further sales will depend on demonstrable demand for BEVs, which would grow faster if all sales of EVs, both imported and domestically built, carried a full tax credit, Safavian (pictured, above) says. She says data indicates that tax credits work – they encourage BEV sales and if they are not available, sales fall.
Autos Drive America represents Honda, BMW, Hyundai, Kia, Mazda, Mercedes, Mitsubishi, Nissan, Subaru, Toyota, Volkswagen and Volvo, none of whom are unionized. “This credit discriminates against our American workers who have chosen not to join a union,” Safavian says.
Her association, along with the Canadian and Mexican governments, are lobbying for changes to the credit as it is debated in the House, Senate and though reconciliation. A letter to House Speaker Nancy Pelosi from Canada’s international trade minister, Mary Ng, warns the credit as proposed would reduce demand for Canada-made BEVs and parts, “resulting in the risk of severe economic harm and tens of thousands of job losses in one of Canada’s largest manufacturing sectors.”
Ng also argues the credit would breach the U.S.-Mexico-Canada Agreement and U.S. World Trade Organization commitments.
Mexican economy secretary Tatiana Clouthier Carrillo also has written to the U.S. House, opposing the credits’ U.S. manufacturing location requirements.
In addition to the UAW, the Detroit Three automakers and leading environmental organizations including the League of Conservation Voters, Environmental Defense Action Fund and Sierra Club have expressed support for the legislation.
“Without such groundbreaking policies, the U.S. will continue to slip further behind foreign competitors in production of (BEVs) with no assurance that future automobile technologies will be built by union workers in the U.S.,” the UAW says in a “Take Action” message asking its 400,000 members to contact their elected officials and express support for the tax-credit measure. – with Jim Irwin
