Toyota, Honda knock union-made EV incentive in Democrats’ spending package

Japanese automakers Honda and Toyota have criticized a proposal that would give an added $4,500 in tax credits to electric vehicles that are union-made in the United States, Reuters reported.

Most electric vehicles would be given a $7,500 tax credit, however that rebate would jump to $12,500 per car if the cars were union-made under the Democratic proposal.

The incentive was introduced on Friday as part of the $3.5 trillion reconciliation spending package. By 2030, President Biden aims to have electric vehicles make up at least half of the country’s car sales, according to Reuters. 

The incentive favors Ford Motor Company, Chrysler parent Stellantis NV and General Motors, as all three companies have union workers who assemble their vehicles. However, that puts some U.S. companies like Tesla, and foreign car manufacturers doing business in the U.S., at a disadvantage.

“Honda is disappointed that the House Ways and Means Committee has proposed to expand the EV consumer tax incentive in an unfair manner that discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union,” the company said. 

“The proposal to provide a $4,500 incentive exclusively for union-built electric vehicles runs counter to the goal of carbon reduction. The current Ways and Means Committee draft makes the objective of accelerating the deployment of electrified vehicles secondary to discriminating against American autoworkers based on their choice not to unionize,” Toyota said.

“Toyota will stand strong against proposals that disadvantage one American autoworker over another,” it added.

In a letter to the House Ways and Means Committee on Monday, Toyota also argued that the tax credit benefited people who could already afford electric vehicles.

The House Ways and Means Committee is expected to vote on the proposal Tuesday, according to Reuters.

“As a country, we face a choice: let other countries like China continue to dominate the production of electric vehicles, or make strategic investments now to ensure American workers and union labor build these vehicles here in the United States for generations to come. American tax dollars should be used to support American jobs,” Rep. Dan Kildee (D-Mich.), who sits on the committee and proposed the legislation, said in a statement.