U.S. House plan would give electric vehicles boost but faces opposition
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[October 30, 2021]
By David Shepardson
WASHINGTON (Reuters) -A $1.75 trillion
Democratic spending proposal could give a big boost to electric vehicles
especially to Detroit's Big Three automakers and the U.S. Postal
Service, but it faces opposition from Republicans, foreign automakers,
Canada and Mexico.
The House plan boosts electric vehicle credits to up to $12,500 per
vehicle, including $4,500 for union-made vehicles and $500 for U.S.-made
batteries. Vehicles would have to be made in the United States starting
in 2027 to qualify for any credit.
The EV tax credits would cost $15.6 billion over 10 years and
disproportionately benefit Detroit's Big Three automakers - General
Motors, Ford Motor and Chrysler-parent Stellantis NV - which assemble
their U.S.-made vehicles in union-represented plants.
United Auto Workers (UAW) President Ray Curry said the provision will
"create and preserve tens of thousands of UAW members' jobs" and "would
be a win for auto manufacturing workers."
"The framework announced today supports good paying union jobs and
stands to benefit our country for decades to come," he said.
Foreign automakers, however, have harshly criticized the decision to
give union-made vehicles a big leg up. A dozen foreign automakers on
Friday urged California's two U.S. senators to oppose it, saying it was
unfair to the state's workers.
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The Mexican government criticized the U.S. proposal, according to a
letter released on Friday in which Economy Minister Tatiana Clouthier
expressed her "strong concern" over the provisions, adding that it is
"contrary to the regional value content rules agreed upon" in the United
States-Mexico-Canada Agreement (USMCA) trade pact.
Last week, Canada said the tax credit proposals could harm the North
American auto industry and run afoul of trade agreements.
OPPOSITION BREWING
On Wednesday, the governors of 11 states, including Texas, Florida and
Arizona, said they opposed the tax credit arguing it would create a
"discriminatory environment in our states by punishing autoworkers and
car companies because the workers in their plants chose not to
unionize."
Tesla and foreign automakers do not have unions representing assembly
workers in the United States and many have fought UAW efforts to
organize U.S. plants.
Honda said in a letter Friday "this tax credit plan would pit Americans
working for the three 'legacy' companies against the American workers of
other automakers."
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A Cadillac Lyriq electric vehicle (EV) under General Motors is seen
during its world premiere on a media day for the Auto Shanghai show
in Shanghai, China April 19, 2021. REUTERS/Aly Song
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The bill would award $6 billion for the U.S. Postal
Service to purchase electric delivery vehicles and infrastructure.
USPS said Friday it estimates under the bill "all delivery fleet
acquisitions could feasibly be electric by 2028, and a corresponding
70% of our entire delivery fleet by" 2030.
In February, USPS awarded a 10-year contract to Oshkosh Defense, a
subsidiary of Oshkosh, to build a mix of internal combustion and EV
delivery vehicles that could be worth$6 billion.
The EV proposal eliminates phasing out tax credits after automakers
hit 200,000 electric vehicles sold, which would make GM eligible,
along with Tesla.
Energy Secretary Jennifer Granholm defended the decision to exclude
Tesla from the higher credit, telling CNBC: "We want to make sure
that we do everything possible to encourage that business and labor
really focus on elevating the standards for everyday Americans."
Earlier this month, over 100 House lawmakers signed a letter urging
Speaker Nancy Pelosi to back the tax credit.
The bill would create a new electric bike and three-wheel vehicle
tax credit, a 30% credit for commercial electric vehicles and $4,000
used EV tax credit.
It would authorize $3.5 billion for "domestic manufacturing
conversion" grants for electric and other green vehicles and provide
$3 billion to boost a U.S. loan program to retool existing auto
plants to build more fuel efficient models and expand it to cover
zero-emission trains, airplanes, boats and Hyperloop technology.
(Reporting by David Shepardson; additional reporting by Sharay
Angulo; Editing by Aurora Ellis)
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