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Tesla, Toyota accuse Biden’s EV tax credit of putting unions over the environment

The proposal being negotiated by House and Senate Democrats gives consumers the full $12,500 tax write-off only if they buy electric vehicles assembled by union workers using American-built batteries. Automobiles produced in nonunion factories would qualify for $4,500 less.

Michigan Democrats Rep. Dan Kildee and Sen. Debbie Stabenow wrote the electric-vehicle tax credit after collaborating with the United Auto Workers and General Motors Co. about the importance of including an explicitly pro-union component, according to Mr. Kildee.

The labor-friendly provision has touched off a fierce lobbying battle by Tesla Inc., Toyota Motor Corp., and other nonunion auto companies that say Mr. Biden is betraying the environment to help a political ally, the United Auto Workers.

“Biden is a UAW…puppet,” Tesla Chief Executive Elon Muskwrote on Twitter, replying to a tweet about the EV tax credits. Tesla, the world’s biggest electric-car maker, didn’t respond to a request for comment.

Mr. Biden visited a GM electric-vehicle assembly plant Wednesday in Detroit and toured the newly renovated factory with GM Chief Executive Mary Barra. He also briefly drove around a parking area in the GMC Hummer electric pickup truck, which is set to go on sale in coming weeks at a base price of around $100,000.

“We’re going to make sure the jobs of the future end up here in Michigan and not halfway around the world,” he said.

The infrastructure bill Mr. Biden signed into law this month includes $7.5 billion to expand the network of electric-vehicle charging stations.

“President Biden’s commitment is clear—jobs taking on the climate crisis must also be jobs that build the middle class,” a White House spokesman said.

Environmental groups including the Sierra Club and the climate-policy think tank Energy Innovation are supportive of the pro-union approach, saying they respect that Mr. Biden is trying to balance several missions in the social spending plan.

That has left it largely to the disadvantaged companies to make the environmental case. Georgia, Tennessee and other states with nonunion auto facilities also have joined the opposition.

“Let’s not play politics with the environment,” Toyota says in full-page national newspaper ads.

Autos Drive America, a trade group representing foreign-based car companies, recently aired television ads saying, “Congress is at it again. They’re pushing a sweetheart deal that rewards unions at the expense of the environment and consumer choice.”

The UAW said in a statement that it backs Mr. Biden’s approach to the electric-vehicle tax credit because it will “create and preserve tens of thousands of UAW members’ jobs.”

For the UAW, electric vehicles represent a challenge. Because those cars are simpler to build than ones with internal-combustion engines, fewer employees are needed and the jobs that remain could pay less, according to studies produced by the UAW.

The union has stressed to the Biden administration that the country shouldn’t sacrifice union jobs to meet its climate goals.

Mr. Biden, who attended the international climate summit in Glasgow, signed an executive order in August that set a target that half of all new vehicles sold in 2030 will be net-zero emissions. Transportation is the biggest U.S. contributor to climate change.

According to Autos Drive America, only two of more than 50 electric vehicles on the market would be eligible for the whole tax credit. Both are Chevy Bolts, made by the UAW-organized General Motors.

Ford Motor Co. and Stellantis NV also have UAW workforces but their current electric models don’t qualify for the full credit.

Limiting consumer choice means fewer people will buy electric vehicles, undermining Mr. Biden’s goal of accelerating cleaner transportation, said Jennifer Safavian, chief executive of Autos Drive America. “If this is really for the environment, this is not the way to do it,” she said. “It’s a pro-union proposal, and they are admitting that.”

Mr. Kildee said the nonunion companies’ claims of unfairness are disingenuous—particularly when they come from foreign auto makers such as Toyota that are unionized in their home countries.

Joe Aldy, who served as special assistant to the president for energy and the environment under President Barack Obama, said the union provision complicates the overall goal of tackling climate change.

“In the climate context, we have an overriding objective to get out all the technology we can that enables our economy to run on zero emissions,” Mr. Aldy said. “Then we layer on another objective: We want to create good-paying jobs. Then we say we want them to be union, good-paying jobs.

“As we add on these objectives, sometimes it makes it harder to satisfy all of them, and satisfy all of them quickly,” he said. “That’s the only thing that does give me pause.”

Mr. Biden snubbed Tesla in an August White House meeting on electric vehicles with UAW officials and executives from Ford, GM and Stellantis, which count EVs as a fraction of their overall sales.

That didn’t go unnoticed by Mr. Musk, who said at a tech conference in September, “Didn’t mention Tesla once, and praised GM and Ford for leading the EV revolution. Does this sound maybe a little biased or something?”

The language of the proposed electric-vehicle tax credit began taking shape over the summer. In July, GM Chief Executive Mary Barra arranged a call with the Michigan delegation and stressed the importance of federal financial support for the auto maker’s goal of producing all-electric vehicles by 2035.

“A lot of it was us pushing our hometown priorities,” said Mr. Kildee, who was on the call. He said he told Ms. Barra it was important that new EV facilities be located where older car and parts factories are now. “I have an engine plant in Flint,” he said.

He and other Michigan members went to work. They paid special attention to battery factories, hoping to reverse the Chinese dominance of the growing industry. China controls more than 75% of the battery market.

The tax credit also kicks in $500 for electric vehicles that contain batteries made in America.

Sen. Gary Peters (D., Mich.) also has insisted that battery facilities should stay in Michigan—even though Sen. Joe Manchin (D., W.Va.), a centrist whose vote is crucial in the 50-50 Senate, has expressed interest in luring those kinds of jobs to his state.

Asked if there was room for battery factories to be located in West Virginia in addition to Michigan, Mr. Peters said that “in my mind, there’s room for Michigan.”

Mr. Manchin said that he doesn’t support the extra tax credit earmarked for union-produced vehicles. “To take $4,500 of taxpayers’ money and give it as an incentive is wrong in any condition,” he said last week. “It’s not who we are.”

Eleven Republican governors of states with nonunion auto facilities wrote Congressional leaders last month urging them to apply the tax credits evenly.

“Congress should not enact proposals that favor vehicles produced by one workforce over another, particularly when doing so dramatically limits consumer choice and undermines larger carbon emission reduction goals,” they wrote.

Republicans are expected to ask the Senate parliamentarian to strip the union-related tax incentives from the bill, arguing that they run afoul of Senate rules requiring spending to have a meaningful fiscal impact that is more than “merely incidental” to the policy proposal.

 

 

This story has been published from a wire agency feed without modifications to the text

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