If union EV incentives reemerge, opponents are ready for the fight

Incentives for electric vehicle (EV) manufacturers using unionized labor died in December along with President Biden’s ambitious Build Back Better bill. 

As Democrats now look to take a second attempt at passing a sweeping social spending and climate package, critics are ready to pounce on the union incentives if the proposal comes back to life. 

“In essence, it says that having more electric vehicles on the road is secondary to promoting unionization,” Toyota said of the incentives in a statement to The Hill recently.

“Nissan has more than 14,000 manufacturing employees in Tennessee and Mississippi and we cannot support a proposal to provide additional credit to be given to vehicles that are made in unionized plants,” the manufacturer said in its own statement.

Among the many proposals in the Democrats’ roughly $2 trillion spending package, the union subsidy would have provided $4,500 toward purchases of electric vehicles assembled at facilities that employ workers operating under a union. That was on top of a $7,500 tax rebate for EV purchases, meaning consumers could have received $12,500 in total incentives under the reconciliation bill. 

Rep. Dan Kildee (D-Mich.) and Sen. Debbie Stabenow (D-Mich.) spearheaded the legislation, which Biden endorsed in October.

The CEOs of 12 international automakers that do not have unionized workforces in the U.S. wrote to Senate leaders late last year to argue the incentives “would severely limit consumer choice and adaptability.”

Should the incentives resurface, those automakers will likely find an ally in moderate Sen. Joe Manchin (D-W.Va.), who objected to a number of provisions in the package, including the union perks. 

The West Virginia Democrat told Automotive News in November that the union-related subsidy was “wrong” and “not American.”

“When I heard about this, what they were putting in the bill, I went right to the sponsor and I said, ‘This is wrong. This can’t happen. It’s not who we are as a country. It’s not how we built this country, and the product should speak for itself,” Manchin said. “We shouldn’t use everyone’s tax dollars to pick winners and losers.”

Asked if Manchin’s stance on the issue has changed, the senator’s spokesperson told The Hill recently that she did not have an updated position.

It’s unclear whether the union incentives will have a place in a scaled-down version of the Democrats’ marquee bill, as negotiations have thus far remained behind closed doors, to the extent they are happening at all. 

The Hill reached out to Kildee and Stabenow, as well as the White House, about whether they will again push for the provision. 

Jennifer Safavian, president and CEO of Autos Drive America, which represents international automakers operating in the U.S., told The Hill in an interview that the incentive “discriminates against American workers who have chosen not to unionize.”

Asked why the employees do not unionize, which could make the companies eligible for the incentive, Safavian said “it’s the workers’ choice whether or not they want to unionize, and their workers have chosen not to unionize.”

She recommended asking each individual company why their personnel chose not to unionize but added that it is her understanding that employees “just don’t feel like they need, you know, a third party to speak on their behalf.”

There is, however, support for the incentive both in Washington — from lawmakers and Biden — and within the auto industry.

A spokesperson for General Motors did not respond directly to whether it supported the union incentives but told The Hill the company “is supportive of policies that accelerate the adoption of electric vehicles and establish the U.S. as a global leader in electrification today and into the future.”

Matthew Davis, legislative director at the League of Conservation Voters, told The Hill in an interview that the U.S. auto industry is at a turning point as manufacturers invest big in retooling their facilities and forging new supply chain partnerships.  

“And so this is all absolutely essential to get those incentives on the books, make sure we have good, family sustaining jobs here, safe jobs, making the cars of the future that everyone is going to be wanting to drive,” he said.

Davis noted “it is not unusual for the government to put certain bounds or restrictions or requirements” on funding it provides for projects, adding that “union shops are more likely to be safer, they’re more likely to deliver higher quality and higher throughput.”

But he is not exactly confident about the incentives’ prospects. Asked about the subsidy being included in the revived Build Back Better bill or standalone legislation, Davis said that while his group supports both tracks, he does not think the proposal is likely to get Republican support, meaning reconciliation may be the only realistic route. 

“I don’t think that there would be 10 Republicans who would support it in the Senate,” he said, going on to emphasize, “it’s still, I think, important policy, and we certainly are gonna be continuing to push for that.”