U.S. Democrats Propose Expansion of Electric Car Subsidies

On Friday, Democratic legislators in the United States suggested expanding electric car tax credits, including considerably greater subsidies for union-made zero-emission models built in the United States, Reuters reports.

This proposal is a major component of President Joe Biden’s goal of ensuring that EVs account for at least 50% of U.S. car sales by 2030 and bump up union jobs in the United States, will give Detroit’s Big Three car manufacturers a significant competitive advantage and has provoked outrage from foreign automakers such as Honda Motor Co and Toyota Motor Corp.

The subsidies for American-made union-made zero emission vehicles are standing at $12,500 per vehicle, compared to a $7,500 credit for most other battery-powered vehicles, which has not increased over the years.

House Democrats haven’t said how much they want to increase EV credits. The steep price increase and other changes may reduce the cost of some electric vehicles, such as GM’s Chevrolet Bolt, by almost a third, making electric cars more comparable with, and in some circumstances more affordable than cars that run on gas.

According to Representative Dan Kildee of Michigan, the idea is to place American manufacturers in the lead and cut emissions much quicker than other policies previously proposed.

Rep. Kildee predicted that the new EV tax credit will cost between $33 billion and $34 billion over ten years.

The United Auto Workers union represents GM, Ford Motor Company, and Stellantis NV, the parent company of Chrysler, all of which assemble their American-made cars in the United States.

Contrary to these, foreign automakers operating in the United States, including Tesla, do not have unions representing assembly workers, and several of them have opposed the UAW’s efforts to organize U.S. factories.

Honda argued in a press release last month that its employees “deserve fair treatment from Congress and should not be punished for their choice of employment” as the EV tax idea gained traction.

The measure, which is part of a broader tax package in a projected $3.5 trillion spending bill, will be voted on by the House Ways and Means Committee on Tuesday.