Washington, Dec. 20 (BUS) – An attempt by the White House to significantly boost tax credits for electric vehicles faced a major hurdle Sunday when a leading Democratic senator said he would not support a $1.75 trillion domestic investment bill.
West Virginia’s Joe Manchin appears to have dealt a fatal blow to President Joe Biden’s signature domestic policy bill, known as Build Back Better, which also aims to expand the social safety net and tackle climate change, Reuters reports.
The bill includes an increase in the current tax credit of $7,500 to $12,500 for US-made vehicles as well as creating a credit of up to $4,000 for used vehicles. The bill would also make General Motors (GM.N) and Tesla Inc (TSLA.O) eligible for tax credits after they reached the 200,000-vehicle limit on the current $7,500 credit.
The bill also includes a 30% credit for commercial electric vehicles.
GM and Ford will launch electric pickup trucks in 2022 and new tax credits may be necessary to meet initial sales targets, as well as meet growing vehicle emissions requirements.
Biden wants 50% of new American cars to be electric or hybrid electric by 2030. The administration is expected to finish as soon as this week finalizing stricter new car emissions rules through 2026, automakers say.
Manchin opposes a $4,500 tax break for union vehicles that is part of a $12,500 offer. He described Union Credit as “wrong” and “not American.”
The tax credits for electric vehicles are backed by Biden, several Congressional Democrats and the United Auto Workers (UAW) and will disproportionately benefit Detroit’s three big automakers — GM, Ford Motor Co (FN) and parent Chrysler Stellantis NV — which are pooled by states United-made vehicles in factories represented by unions.
Tesla and foreign automakers operating in the United States do not have unions representing assembly workers and many have fought against the UAW’s efforts to regulate American factories.
Toyota Motor Corp. (7203.T), which has a plant in West Virginia but whose US employees are not union members, lobbied against the $4,500 union credit.
Toyota this month announced it is building a $1.29 billion battery plant in North Carolina, while EV startup Rivian Automotive (RIVN.O) said Thursday it will build a $5 billion plant in Georgia.
Vehicles will have to be manufactured in the US starting in 2027 to qualify for any of the $12,500 credit, which includes $500 for US-made batteries. It faced criticism from Canada, Mexico, Japan and the European Union.