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Revamped EV tax credit: Tesla, Toyota, Honda pushing back vs. union-made bonus

Honda, Tesla, and Toyota are pushing back against a proposal by Democrats in the United States House of Representatives to give union-made electric cars an additional $4,500 federal tax credit.

The two Japanese automakers issued statements late last week criticizing the move, Reuters reported. Both Honda and Toyota operate non-union factories in the U.S., and said a bonus for union-made vehicle would discriminate against workers for not belonging to a union.

Toyota BZ4X concept - 2021 Shanghai auto show

Toyota BZ4X concept – 2021 Shanghai auto show

Part of President Biden’s $3.5 trillion infrastructure plan, the proposal, would make union-made EVs eligible for up to $12,500 in federal incentives, including a $500 credit for U.S.-produced batteries, up from the current $7,500 maximum.

Toyota followed up its initial statement Monday with a letter to Congress that framed the extra $4,500 as a handout to the wealthy, according to Reuters. The letter urged Congress to “reject using the country’s limited resources to give exorbitant tax breaks to those wealthy enough to buy high-priced cars and trucks.”

2017 Tesla Model 3 and Model S in Tesla assembly plant parking lot, Fremont, CA, November 2017

2017 Tesla Model 3 and Model S in Tesla assembly plant parking lot, Fremont, CA, November 2017

Biden has said bringing more manufacturing back to U.S. factories with unionized workforces will be a priority. He has also proposed point-of-sale incentives, and price caps for EV incentives.

Tesla CEO Elon Musk also chimed in on Twitter Sunday, saying the proposal was “written by Ford/UAW [United Auto Workers] lobbyists.”

It’s worth noting that most EVs for sale have American-built batteries—with Tesla leading the way in volume for years with its Nevada “Gigafactory.”

The $4,500 union-made bonus still has to make its way through the legislative process, but one new EV incentive already appears to have fallen by the wayside. Earlier this year legislators also proposed a tax credit for used EVs, but the effort didn’t find traction.

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