At the top of agenda as Congress reconvenes this week is work on a $3.5 trillion budget bill and a separate $1 trillion infrastructure bill, which together include provisions such as money for electric vehicle chargers as well as new tax credits for electric vehicles and other measures critical to the automobile industry.
President Joe Biden is eager to push ahead with accelerating the adoption of electric vehicles as part of a broader effort to address climate change, which has grown more disruptive and more destructive.
With automakers investing billions of dollars in new electric vehicles, the tax credits designed to encourage consumers to purchase the new EVs are one area of intense focus as the negotiations around the so-called reconciliation bill, which includes changes in tax policy.
Despite the support broad support from carmakers, the tax credits could prove to be one of the more contentious elements of the Biden agenda.
Michigan Democrats push pro-union bill
Michigan Democrats Rep. Dan Kildee (D-Flint), who holds a seat on the critical House Ways and Means Committee through which all tax legislation must pass, and Senator Debbie Stabenow (D-Michigan) are promoting provisions favored by their political allies in the United Auto Workers.
Kildee proposed an amendment to Biden’s “Build Back Better” plan that eliminates the caps on EV tax credits, which are now in place and are pinching carmakers such as Tesla and General Motors. But it also gives the largest rebates to electric vehicles made domestically with union labor.
Stabenow championed a similar provision passed by the Senate Finance Committee earlier this year.
Larger tax credits for union-made EVs
Under the Kildee/Stabenow “Made in America Provision,” there would be a $7,500 consumer credit for EVs. But those assembled in the U.S. with unionized labor also would be eligible for a $4,500 bonus and an additional $500 bonus for batteries built in the United States with union labor.
With the bonuses, union-made EVs would qualify for $12,500 in rebates applied at point of sale or on tax returns, depending on the consumer’s preference, according to the bill’s authors.
In addition, after the first five years the consumer subsidies continue for vehicles assembled in the U.S. and rebates would continue to apply.
However, vehicles made in South Korea, Japan, China or Europe would no longer be eligible for the subsidies after five years.
“I commend Representative Kildee for crafting legislation to protect and create better paying union jobs for years to come,” said UAW President Ray Curry. “Rep. Kildee’s provision would go a long way in supporting good paying union jobs in EV auto sector that President Biden has championed.”
Last weekend, Curry said he hoped the provision would have bi-partisan support.
“For too long U.S. tax credits meant to create good paying American jobs have subsidized products not made in the United States or at substandard wages,” said Curry.
The provisions are bound to prove contentious since companies such as Tesla, Nissan and Volkswagen build electric vehicles in non-union plants in the U.S. and Mercedes-Benz is preparing to build non-union EVs in Alabama.
Biden, who is eager to win the support of working-class voters, said he wants his economic plan to include a larger role for unions, which he maintains are critical for higher wages and a stable middle class.