Toyota, Honda Oppose Expanded EV Tax Credit Favoring Ford, GM, Stellantis

Automakers Oppose Proposed EV Tax Credit Expansion

Toyota Motor and Honda are actively appealing to legislators to vote against a bill that seeks to broaden tax incentives for electric vehicles. These vehicles must be manufactured within the United States and built by union labor.

Bill Details and Concerns

The proposed legislation, which Toyota has labeled as “blatantly biased” and “exorbitant” in a communication to Congress, would increase the federal tax incentives available for qualifying vehicles. The incentive could rise from $7,500 to as much as $12,500 for cars that are both union-made and domestically produced.

An additional $500 credit would be applied to vehicles utilizing batteries manufactured within the U.S. If enacted, this legislation would exclude vehicles from manufacturers such as Toyota, Honda, and Tesla from the expanded credit. Conversely, the “Big Three” automakers based in Detroit would all meet the criteria for qualification.

Arguments Against the Bill

Toyota expressed its concerns in a letter to lawmakers, stating that the current draft of the bill prioritizes objectives other than accelerating the adoption of electric vehicles. Specifically, it alleges discrimination against American autoworkers based on their decision regarding unionization.

The company argues that this approach is both unfair and incorrect, and has requested that legislators reject the proposal. Furthermore, Toyota contends that the bill disproportionately benefits wealthier individuals.

A means-testing provision within the bill limits access to the credit for individuals with adjusted incomes up to $400,000, or households earning up to $800,000. The establishment of an income cap, and its appropriate level, remains a significant point of debate between Democrats and Republicans in Congress.

Criticism from Tesla CEO

Tesla CEO Elon Musk also voiced his opposition to the bill via Twitter. He suggested that the legislation was crafted by lobbyists representing Ford and the UAW, citing Ford’s electric vehicle production in Mexico. He questioned how the bill would benefit American taxpayers.

Impact on Existing Tax Credits

This proposed legislation represents the first potential increase to the existing $7,500 EV tax credit in over ten years. The bill would also eliminate a current restriction that disqualifies vehicles from manufacturers who have already sold over 200,000 EVs from receiving the credit.

This change would reinstate eligibility for vehicles from companies like General Motors and Tesla.

Support for the Bill

The bill has garnered support from GM, Ford Motor, and Stellantis, all major automakers with a workforce represented by the United Auto Workers union. The UAW itself is also a proponent of the proposal.

Current Status and Broader Context

The bill is currently under consideration by the House Ways and Means Committee. The expanded credit is just one component of a larger $3.5 trillion budget reconciliation bill being debated by Congress.

This comprehensive bill encompasses a wide range of socially progressive proposals focused on areas such as education, healthcare, and climate change initiatives.