California, New York, and other democrat-run states have individually announced a ban on the sale of internal combustion engine vehicles by 2035. And before that happens, it looks like lawmakers in Washington DC are planning to help push the rise of electric vehicles with a new bill. The specifics of the bill detail that tax credits of up to $12,500 per vehicle for any union-built zero-emission automobile built in the United States. According to Reuters, other zero-emission cars either built in non-union plants or imported from elsewhere will continue with a $7,500 incentive. Being that all American General Motors, Ford Motor Company and Stellantis plants are unionized, this bill would strongly and exclusively favor America’s three biggest automotive manufacturing companies. This comes at a time when each of them are going full steam ahead on EVs, with big unveils recently including the GMC Hummer EV, the Ford F-150 Lightning, and confirmation of a Ram EV as well.
The bill also eliminates the cap that ended tax credits on zero emission vehicles made by automakers that have already sold 200,000 units of them. Thirdly, a minor credit up to $2,500 for the purchase of a used EV is in the bill.
General Motors, Ford, Stellantis, UAW Have An Advantage
GM, Ford, and Stellantis (parent company of FCA) assemble their U.S.-made vehicles in plants represented by the United Auto Workers union. At the same time, foreign automakers that have a manufacturing footprint in the U.S. – particularly in the south – don’t have unions representing their assembly workers, which gives the Big 3 an advantage. As a result, rival automakers such as Toyota and Honda oppose the bill. Honda even came out with a statement regarding that its workers “deserve fair treatment from Congress and should not be penalized for their choice of a workplace.”
Tesla Motors would also be left out of the $12,500 tax credit, as Tesla plants are not unionized.
For the bill to pass, the Democrats will need to hold onto all 50 of their Democratic Senate Votes, with Republicans harshly criticizing the spending bill. In May, the Senate approved legislation that boosts EV credits up to $12,500 for U.S. vehicles made by union workers, but it didn’t remove the phase-out for manufacturers after they hit the 200,000 unit mark. The bill would last for ten years, and consumers would be able to deduct the value of their credit from the sales price upon purchasing their vehicle.
The bill would also limit the EV credit to cars $55,000 or less, with trucks being $74,000 or less. This would put vehicles like the GMC Hummer EV Edition 1 and an optioned-out Rivian R1T outside of tax credit eligibility, but that price ceiling is still pretty high if you ask us. The Senate also passed a vote prohibiting taxpayers from claiming EV tax credits if they make more than $100,000 annually.