Toyota, Honda Oppose US Plan to Give $4,500 Tax Incentive For Electric Vehicles

Toyota Motor Corp and Honda Motor Co on Saturday sharply criticized a proposal by Democrats in the U.S. House of Representatives to give union-made electric vehicles in the United States an additional $4,500 tax incentive.

Toyota said in a statement that the plan unveiled late Friday discriminates "against American autoworkers based on their choice not to unionize."

Detroit's Big Three Automakers

The bill, set to be voted on Tuesday by the Democratic-led House Ways and Means Committee as part of a proposed $3.5 trillion sp

ending bill, would benefit Detroit's Big Three automakers, which have union-represented auto plants.

The Toyota Motor Corp. company logo is pictured on the production line Reuters

In a statement, Honda called the bill "unfair" and said it "discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union. ... The Honda production associates in Alabama, Indiana and Ohio who will build our EVs deserve fair and equal treatment by Congress."

The proposal, estimated to cost $33 billion to $34 billion over 10 years, would boost to up to $12,500 the maximum tax credit for electric vehicles, up from the current $7,500. The $12,500 figure includes a $500 credit for using U.S.-produced batteries.

The proposal is a key part of Democratic President Joe Biden's goal to ensure EVs comprise at least 50% of U.S. vehicle sales by 2030 and boost American union jobs.

Phasing out Automakers' Tax Credits

The bill, however, does away with phasing out automakers' tax credits after they hit 200,000 electric vehicles sold, which would make General Motors Co and Tesla Inc eligible again. It would also create a new smaller credit for used EVs of up to $2,500.

Electric Car
Electric Car (Representational Picture) Pixabay

GM, Ford Motor Co and Stellantis NV, the parent of Chrysler, assemble their U.S.-made vehicles in plants represented by the United Auto Workers (UAW) union.

In contrast, foreign automakers operating in the United States as well as Tesla do not have unions representing assembly workers and many of them have fought efforts by the UAW to organize U.S. plants.

Tesla would be eligible for up to $8,000 credits under the bill.

UAW President Ray Curry said the tax credit provision "would go a long way in supporting-good paying union jobs in (the) EV auto sector that President Biden has championed."

The bill limits the EV credit to cars priced at no more than $55,000, while trucks could be priced up to $74,000.

Toyota added it will "fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers who can't afford high-priced cars and trucks."