Democrats’ effort to spur electric vehicle (EV) adoption has set off an intense lobbying battle on Capitol Hill as car manufacturers jockey for influence over legislation that will shape the industry’s future.
Automakers generally back President Biden’s green energy plan, which would spend billions of government dollars to construct charging stations across the nation and expand incentives that lessen the cost of buying an EV. But they’re sharply divided over a key tax credit component of the proposal.
Under the legislation advanced by the House Ways and Means Committee last month, most EVs would qualify for a $7,500 tax credit. But union-built EVs assembled in the U.S. would receive an additional $4,500 in credits.
Only Ford, General Motors and Stellantis, Chrysler’s parent company, would benefit from the extra incentive, as union workers assemble most of their EVs in U.S. plants. The proposal effectively leaves other automakers, including Tesla, the nation’s main EV manufacturer, at a $4,500 per vehicle disadvantage.
The provision has drawn outrage from car manufacturers that do not have unionized workforces, including Honda and Toyota, which blasted the legislative language as “blatantly biased” and “discriminatory.”
“If Congress is serious about addressing the climate crisis, as well as its goal to see these vehicles built in America, it should treat all EVs made by U.S. auto workers fairly and equally,” Honda said in a statement.
Tesla CEO Elon Musk, who has bitterly fought unionization efforts, also criticized the measure, saying at a recent Beverly Hills, Calif., conference that the Biden administration is “controlled by unions.”
Over the past month, auto industry executives and trade groups have mounted an all-out push to influence the final EV legislation that will be included in Democrats’ multitrillion-dollar reconciliation package.
Autos Drive America, a trade group that represents most major foreign-owned automakers such as Honda, Toyota and Volkswagen, is running TV advertisements in Washington urging lawmakers to reject the pro-union measure.
“Carmakers are racing to get more EVs on the road, but Congress’s sweetheart deal for unions would take most of today’s EVs off the table for many American families,” the group’s most recent ad tells viewers.
The Detroit-based United Auto Workers (UAW) is fighting to protect the union provision, which was introduced by Michigan lawmakers in the House and Senate. UAW President Ray Curry said in a statement last week that the measure “will ensure that subsidies for electric vehicles go to good union jobs here in the U.S.”
“We need these jobs of the future to be as good or better than the jobs they replace,” he said.
Most automakers have increased their federal lobbying spending this year, according to OpenSecrets. General Motors shelled out roughly $5.6 million to deploy 82 lobbyists through the first half of 2021, up 13 percent from last year. Toyota, which critics say has actively lobbied to slow the nation’s EV transition, spent nearly $3.4 million, up 15 percent from last year.
The $1.2 trillion bipartisan infrastructure bill, passed by the Senate in August, would provide $7.5 billion to build EV charging stations across the nation, a huge boost for most carmakers that haven’t yet made the investment themselves.
Automakers are stressing that the EV infrastructure funding must be coupled with customer incentives. They say that without tax credits, customers are less likely to switch over to EVs, which make up only 2 percent of U.S. car sales.
While the auto industry is divided on some issues, it’s united behind Democrats’ proposal to end an existing provision that phases out tax credits after a manufacturer reaches 200,000 EV sales. Carmakers are also pushing Democrats to ax a proposed cap on EV tax credits for customers with incomes of $400,000 or more and a measure that limits the EV tax credit to cars that cost $55,000 or less.
The Zero Emission Transportation Association, which lobbies for luxury EV makers such as Tesla, Rivian and Lucid Motors, argues that the price limit would “force manufacturers to produce lower range, less desirable vehicles, which diminishes the consumer experience and will slow EV adoption.”
Automakers will need to sway Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (D-Ariz.) and Mark Kelly (D-Ariz.), who in August voted with Republicans for a nonbinding budget amendment that would limit the EV tax credit to buyers with incomes below $100,000 and EVs that cost less than $40,000.