(Bloomberg) -- A proposal by U.S. House Democratic lawmakers to give union-made electric vehicles higher subsidies drew sharp criticism by non-unionized automakers, including Toyota Motor Corp. and Rivian Automotive Inc.
Under the 10-year proposal unveiled late Friday, union-built electric vehicles will get an additional $4,500 tax incentive, a measure that would favor the three traditional Detroit carmakers -- General Motors Co., Ford Motor Co. and Stellantis NV -- whose factory workers are represented by the United Auto Workers. That sweetener would be on top of a $7,500 base incentive that would be available for EV vehicles.
The current draft discriminates “against American autoworkers based on their choice not to unionize,” Toyota said in a statement Saturday. “We will also fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers.”
Rivian, the electric-truck maker backed by Amazon.com Inc., said while the expansion of the federal EV tax credit is a “step in the right direction,” the proposal “risks confusing” potential buyers.
“Rivian supports a straightforward expansion without artificial limits to encourage EV adoption to as many households as possible,” according to a statement on Sunday.
Foreign automakers and other non-unionized carmakers have been voicing their unease with signs the Biden administration wants to give their unionized Detroit rivals a leg up in the race to win over electric vehicle buyers. Toyota, Honda Motor Co., and Tesla Inc. were all left out in a White House event in August, during which President Joe Biden unveiled a national goal of having half of new cars sold in the U.S. to be emissions-free by 2030.
See Also: Biden Snubs Tesla, Top U.S. Seller of EVs, at Event Touting EVs
The House Ways and Means Committee’s plan would provide a base credit of $7,500 for electric vehicles for the first five years, with another $4,500 credit for those made in a union facility. An additional $500 credit will be provided for vehicles using a domestically manufactured battery.
The proposal was for inclusion in Democrats’ $3.5 trillion tax-and-spending legislation, according to Representative Dan Kildee, a Michigan Democrat. Passage of that bigger package has been delayed as Senator Joe Manchin, a Democrat whose vote is crucial in the evenly split U.S. Senate, renewed objections to the bill, citing tax and inflation concerns.
Additional details from the House Ways and Means Committee’s plan include:
- Elimination of the current cap of 200,000 vehicle per manufacturer for tax credit, a decision that would help GM and Tesla
- Credit would only apply to vehicles that have a manufacturer’s suggested retail price of less than $55,000 for a car, $64,000 for a van, $69,000 for an SUV and $74,000 for a pickup truck
- Credit would have annual income limitation of $400,000 for an individual, $600,000 for heads of household and $800,000 for couples
- Starting in 2027, the $7,500 base credit would apply only to EVs built in the U.S.
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