WASHINGTON—When it comes to electric vehicle incentives, should the federal government play favorites?
Legislation that would tie additional EV tax credits for consumers to vehicles assembled in unionized U.S. factories has stirred up discussions over preferential treatment.
The bill—dubbed the Clean Energy for America Act—was advanced by the Senate Finance Committee in May and includes a proposal led by Democratic Sen. Debbie Stabenow of Michigan that would allow car buyers to receive as much as $12,500 for EVs assembled by union workers at U.S. factories.
Although the bill—which does not have a Republican co-sponsor—is unlikely to be taken up by the full Senate, the proposal has some industry stakeholders calling for a level playing field as auto makers aim to boost U.S. production of EVs to meet future market demand.
"Incentives for EV sales should be broadly applicable across the marketplace in order to accelerate sales and consumer adoption," said Don Stewart, executive vice president of public affairs at the Alliance for Automotive Innovation, which represents domestic and international auto makers that sell vehicles in the U.S.
EVs represent only a tiny fraction of overall U.S. new-vehicle sales—a major reason industry groups such as the alliance are looking to Washington and urging policy makers to support efforts that will encourage their adoption.
With consumer incentives, one industry concern has been policies that could limit the vehicles eligible for tax credits before the EV market takes off in the U.S.
While international auto makers would be eligible for some of the incentives under Stabenow's proposal, their vehicles would not be eligible for the top amount since they do not currently operate union plants in the U.S., said Kristin Dziczek, senior vice president of research at the Center for Automotive Research in Ann Arbor, Mich.
"I think you would find all of the internationals are going to have a concern over having union plants have an advantage in the consumer-incentives side," she told Automotive News.
The alliance has repeatedly called for supply-and-demand policy approaches that bring together all stakeholders—including suppliers and union workers—as well as providing broad-based consumer incentives at the federal and state levels.
Many of the group's members are investing billions in EVs and eyeing opportunities in the U.S. specifically, as the Biden administration signals a commitment to transitioning to electric models and bolstering U.S. competitiveness with China.
Volkswagen said last month that it was drafting plans to make and sell more EVs in the U.S. after the president unveiled a $174 billion plan to boost electric vehicles, Bloomberg reported.
The German auto maker, in a statement to Automotive News, said it supports incentives that "do not favor one auto maker over another."
"While we are encouraged by the Biden administration's support for (EVs) and other related infrastructure, it is critical to ensure EV policies support rather than bifurcate the market, so that the U.S. remains an e-mobility leader and that it is consumers who drive choice—not the government," Volkswagen Group of America said in the statement.
Devin Lindsay, IHS Markit's principal analyst for North American powertrain forecasting, said the announcements by VW and other auto makers aren't surprising given the more EV-friendly environment under the current administration. But it will take "all incentives" to ramp up the overall battery-electric market in the U.S.
Jennifer Safavian, CEO of Autos Drive America, says Stabenow's proposed tax incentives are unfair for American auto workers who have chosen not to join a union.
"It prioritizes union workers versus nonunion workers, which is very discriminatory," said Safavian, whose group represents the U.S. operations of international auto makers. The UAW, which praised the proposal, said lawmakers should be using policy to create a stronger middle class.
"No one is talking about prohibiting people from selling any vehicles," said Josh Nassar, the union's legislative director.
"This is simply talking about added benefits and incentives."