A proposal by Democratic lawmakers in the US House of Representatives to give union-made electric vehicles (EVs) higher subsidies drew criticism from non-unionized automakers, including Toyota Motor Corp, Tesla Inc and Rivian Automotive Inc.
Under the 10-year proposal unveiled late on Friday, union-built electric vehicles are to get an additional US$4,500 tax incentive, a measure that would favor the three traditional Detroit automakers — General Motors Co (GM), Ford Motor Co and Stellantis NV — whose factory workers are represented by the United Auto Workers (UAW).
That sweetener would be on top of a US$7,500 base incentive that would be available for electric vehicles.
The draft discriminates “against American autoworkers based on their choice not to unionize,” Toyota said in a statement on Saturday. “We will also fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers.”
Tesla chief executive officer Elon Musk said on Twitter that the proposal smacked of being heavily influenced by the UAW, while Honda Motor Co also said it discriminatory and urged the US Congress to remove the language.
Rivian, the electric-truck maker backed by Amazon.com Inc, said the expansion of the tax credit is a “step in the right direction,” but that the proposal “risks confusing” potential buyers.
“Rivian supports a straightforward expansion without artificial limits to encourage EV adoption to as many households as possible,” the Irvine, California-based start-up, whose electric pickup truck is not yet available for sale, said in a statement on Sunday.
Foreign automakers and other non-unionized automakers have been voicing their unease with signs that the administration of US President Joe Biden wants to give their unionized Detroit rivals a leg up in the race to win over electric vehicle buyers.
Toyota, Honda, and Tesla were all left out of a White House event last month, during which Biden unveiled a national goal of having half of new vehicles sold in the US to be emissions-free by 2030.
The US House of Representatives Ways and Means Committee’s plan would provide a base credit of US$7,500 for electric vehicles for the first five years, with another US$4,500 credit for those made in a union facility. An additional US$500 credit would be provided for vehicles using a domestically manufactured battery.
The proposal was for inclusion in Democrats’ US$3.5 trillion tax and spending legislation, said US Representative Dan Kildee, a Michigan Democrat.
Additional details from the committee’s plan include elimination of the current cap of 200,000 vehicle per manufacturer for tax credit, a decision that would help GM and Tesla.
Credit would only apply to vehicles that have a manufacturer’s suggested retail price of less than US$55,000 for a car, US$64,000 for a van, US$69,000 for a sports utility vehicle and US$74,000 for a pickup truck, the plan says.
Credit would have annual income limitation of US$400,000 for an individual, US$600,000 for heads of household and US$800,000 for couples, and starting in 2027, the US$7,500 base credit would apply only to electric vehicles built in the US, according to the plan.
While Tesla — the biggest seller of electric vehicles in the US — would benefit by having the 200,000-vehicle cap removed, it, too, is a non-union shop and as such its customers would miss out on the sweetener.
Musk, in his Twitter post, said the proposal smacked of being heavily influenced by the UAW and by Ford, which for now builds its only electric vehicle — the Mustang Mach-E — in Mexico. Foreign-built electric vehicles sold in the US are eligible for the credit in the first five years.
Ford’s battery-powered F-150 Lightning is to be built at a new factory in Dearborn, Michigan, that Biden visited in May. The Lightning is scheduled to go on sale next spring.
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