Biden’s $1.85T bill offers boost to union-made EVs

But Republicans fear provision will hurt autoworkers, states mostly in South

WASHINGTON — President Joe Biden and Democrats in Congress are looking to give U.S. automakers with union employees the inside track on the burgeoning electric vehicle market, triggering opposition from foreign trade partners and Republicans who worry that manufacturers in their home states will be placed at a competitive disadvantage.

The $1.85 trillion spending package that Democrats are laboring to pass through Congress includes an array of programs designed to curb global warming and slash U.S. emissions. It includes incentives to hasten the transition to electric vehicles, which represent a small but rapidly growing share of the market.

If enacted, the bill would provide a $7,500 tax credit for consumers who purchase electric vehicles through 2026. Beginning the following year, only purchases of electric vehicles made in the U.S. qualify for the credit. The base credit goes up by $4,500 if the vehicle is made at a U.S. plant that operates under a union-negotiated collective bargaining agreement. Only auto plants owned by General Motors Co., Ford Motor Co. and Stellantis NV qualify.

“I want those jobs here in Michigan, not halfway around the globe,” Biden said when visiting a UAW job training center last month.

The union friendly add-on is raising hackles internationally and inside the U.S., testing the Democratic Party’s commitment to a labor-friendly approach that Biden has made central to his political brand. The provision could boost the sale of EVs while disadvantaging foreign automakers with U.S. plants that employ tens of thousands of manufacturing workers, particularly in Southern states where laws have made it hard to unionize.

Democrats say supporting union jobs is good for the economy and the country.

“I’m a student of America’s economic history and labor unions have consistently helped build out the middle class,” said Rep. Dan Kildee, D-Mich. “We should have a policy that’s consistent with our values. Our values are that communities are stronger, the economy is stronger when workers have wages, benefits and protections that not only apply to them, but set the highest standard for all other employees.”

Ambassadors from the European Union, Canada and South Korea are among those who recently wrote to congressional leaders saying the credit is inconsistent with U.S. trade commitments and “tarnishes the spirit of trade laws that seek to establish the free and fair movement of goods.”

Meanwhile, the governors of 11 states complained the more generous tax credit for cars made in union plants would punish companies and workers in their states. GOP lawmakers portray it as payback for a major Democratic Party benefactor, the United Auto Workers, which spent $1.25 million in support of federal candidates in the 2020 elections.

EVs are 2% of U.S. new vehicles sales, but IHS Markit, a research and analytics company, expects the share to grow to 32% by 2030.