Tesla, Toyota and Honda slam $ 4,500 union-built electric vehicle tax credit

That's why GM's electric vehicle push is a big risk

A man plugs in the charging socket on 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 electric vehicle tax incentive that includes additional cash for cars and trucks produced in the United States.

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

The comments preceded an electric vehicle stimulus package discussed Tuesday by the House Ways and Means Committee as part of a $ 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 Mexico-built Mustang Mach-E crossover. The company plans to produce electric versions of the F-150 pickup truck and transit van in the United States starting next year.

Tesla produces the most batteries for electric vehicles and cars in the United States, but its workforce is not represented by a consortium like Toyota and other non-national automakers. Hyundai, Kia, Honda and Nissan also opposed the bill, saying the incentives created by the unions were unfair and biased.

The incentive also removes the phase-out of 200,000 vehicles from the bill credit, as well as the current tax credit of $ 7,500 for the purchase of plug-in electric vehicles, as well as the $ 500 if the vehicle’s battery is manufactured. in the United States, allowing GM and Tesla authorized customers will again be eligible for the incentives. Buyers of electric vehicles produced by unionized employees in the United States will be entitled to an additional $ 4,500 in tax credits, bringing the total incentive to $ 12,500.

Toyota called the bill “unfair” and “incorrect,” citing the proposal that discriminates against its non-union American workforce.

“The current Ways and Means Committee project aims to accelerate the deployment of electrified vehicles by discriminating against American auto workers based on their preferences,” Toyota executives said in a letter to committee chairs on Monday. “It’s unfair, it’s 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 the climate crisis, while aiming to see these vehicles made in America, it will have to deal with all those made by American workers. of the automobile. ┬╗Electric vehicles 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 electric vehicle stimulus plan.

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

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

Autos Drive America, a lobbying organization representing international automakers in the United States, called the electric vehicle incentive program “un-American,” creating “an unfair playing field” that would limit consumer choice and prevent non-federal Americans from punishing 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.

According to the Joint Committee on Taxation, the electric vehicle stimulus package is expected to cost around $ 15.6 billion. That’s lower than the initial estimate of $ 33 billion to $ 34 billion by Representative Dan Kildy, the Michigan Democrat who proposed the legislation.

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 the incentives created by the unions, members of the House Ways and Means Committee raised questions on Tuesday about the national content of vehicles as well as a bill potentially benefiting the wealthy.

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

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