Tesla, Toyota and Honda criticize $4,500 tax credit for union-built EVs

A man plugs the charging plug into a General Motors Company (GM) Chevrolet 2017 Volt hybrid electric vehicle (EV) at a charging station in Jeju, South Korea.

Seongjoon Cho | Bloomberg | Getty Images

DETROIT – Tesla, Toyota Motor and other automakers are criticizing a proposed $12,500 in electric vehicle tax incentives that include additional cash for cars and trucks produced in the US.

Executives at automakers, including Tesla CEO Elon Musk, said the $4,500 incentive for vehicles assembled at the union plant is unfairly favored by General Motors, Ford Motor and Stelantis (formerly Fiat Chrysler). Hourly workers for those automakers – traditionally known as Detroit 3 – are represented by the United Auto Workers union.

The comments came ahead of an EV stimulus package being discussed Tuesday by the House Ways and Means Committee as part of a proposed $3.5 trillion spending bill.

“This is written by Ford/UAW lobbyists as they build their electric car in Mexico. It’s unclear how this serves US taxpayers,” Musk tweeted Sunday night.

Ford’s only all-electric vehicle currently is the Mustang Mach-E crossover built in Mexico. The company plans to produce electric versions of the F-150 pickup and transit van in the US starting next year.

Tesla produces the largest number of vehicle batteries and electric cars in the US, but its workforce is not represented by a consortium like Toyota and other non-domestic automakers. Hyundai, Honda and Nissan also opposed the bill, citing the union-created incentives as unfair and biased.

The incentive also removes the 200,000-vehicle phase-out of the bill credit, along with the current $7,500 tax credit for purchasing plug-in electric vehicles, as well as the $500 if the vehicle’s battery is made in the U.S., allowing GM and Tesla customers allowed will once again be eligible for incentives. Buyers of EVs produced by union employees in the US will be eligible for an additional $4,500 in tax credits, bringing the total incentive to $12,500.

Toyota described the bill as “unfair” and “incorrect”, citing the proposal that discriminates against its US workforce that is not unionized.

“The current Ways and Means Committee draft aims to accelerate the deployment of electrified vehicles by discriminating against American autoworkers based on their preferences,” Toyota manufacturing executives said in a letter to committee chairmen on Monday. “This is unfair, this is wrong, and we ask you to decline this partisan offer.”

Honda made similar remarks in a statement on its website: “If Congress is serious about addressing the climate crisis, as well as aiming to see these vehicles manufactured in America, it will have to deal with all those made by American auto workers.” EVs must be treated fairly and equitably. We urge Congress to encourage federalization to remove discriminatory language from its budget reconciliation proposal.”

GM, Ford and Stellantis back the EV stimulus package.

“This legislation will help more Americans get into EVs, as well as support American manufacturing and union jobs,” Kumar Galhotra, Ford president of US and international markets, said in a statement.

President Joe Biden is pro-union and has consistently supported incentives to expand US production of electric vehicles.

Autos Drive America, a lobby organization representing international automakers in the US, called the EV incentive package “un-American”, creating an “unlevel playing field” that would limit consumer choice and prevent non-federal American will punish workers, their families and their communities. “

According to Reuters, the proposed EV credit will last for 10 years, allowing consumers to deduct the value of the credit from the sale price at the time of purchase. Representative Dan Kildy, a Michigan Democrat who proposed the legislation, told the news organization that the new EV tax credit would cost an estimated $33 billion to $34 billion over that time period.

President Joe Biden speaks during a tour of the Ford Rouge Electric Vehicle Center on May 18, 2021 in Dearborn, Michigan.

Michael Wayland | CNBC

In addition to union-created incentives, members of the House Ways and Means Committee raised questions on Tuesday about the domestic content of vehicles as well as a bill potentially benefiting the wealthy.

The bill states that individual taxpayers’ adjusted gross income must not exceed $400,000 to receive the new EV tax credit. This would limit the EV credit to cars priced over $55,000 and trucks up to $74,000.

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