Toyota to Congress: Reject EV tax incentives that favor Detroit Three

Riley Beggin
The Detroit News

Washington — Executives at Toyota Motor Corp. are urging members of Congress to reject a proposal that would expand tax credits for electric vehicles up to $12,500 and offer significant incentives to buy union-made cars. 

The legislation, proposed by Rep. Dan Kildee, D-Flint Township, would lift the manufacturer cap on EV credits and implement $7,500 point-of-sale consumer rebates for electric vehicles. It would pay out an additional $4,500 for vehicles assembled in a union facility and another $500 for vehicles using a battery manufactured in the U.S.

"The current Ways and Means Committee draft makes the objective of accelerating the deployment of electrified vehicles secondary by discriminating against American autoworkers based on their choice not to unionize," Toyota wrote Monday in a letter to leaders of the House Ways and Means Committee, which plans to vote this week on whether to include the bill in Democrats' $3.5 trillion social spending bill. 

"This is unfair, it is wrong, and we ask you to reject this blatantly biased proposal."

Toyota assembly plants are not unionized, and many are located in southern states where unionization is less common. 

Toyota executives from Indiana, Texas, Missouri, Kentucky, Alabama, California, Mississippi, Tennessee, Michigan and West Virginia argued in the letter that whether an EV is made by union workers is irrelevant to the administration's climate goals and that pay for workers in Toyota's nonunion facilities is competitive with union wages. 

"Our common goal is straightforward: reduce the amount of carbon that autos release into the atmosphere by putting more electric vehicles (EVs) on the road," the company wrote. 

"While the EV tax proposal before you makes strides toward that goal, it includes provisions that will discriminate against nearly half the autoworkers in the country and puts the environment second to unrelated agendas."

Honda Motor Co., which also does not have unionized production workers, said in a statement Monday that Congress should "treat all EVs made by U.S. auto workers fairly and equally" if they intend to fight climate change. Tesla Inc., which also is nonunion, has criticized the legislation too.

General Motors Co., Ford Motor Co. and Stellantis NV praised the legislation. All three employ assembly workers represented by the United Auto Workers union. 

The bill seeks to bar the wealthiest Americans and luxury vehicle producers from benefiting from the program by setting caps on income and sale price to qualify.

Sedans under $55,000, vans under $64,000, SUVs under $69,000 and pickup trucks under $74,000 would be eligible for the credits. Individuals with an adjusted gross income of up to $400,000, heads of households making up to $600,000 and joint filers making up to $800,000 would be able to use the program.

The price and income caps are significantly higher than those proposed by Senate Republicans, who voted in a nonbinding amendment in August to stop buyers from claiming credits if they make more than $100,000 annually or if the vehicle costs more than $40,000.

Toyota, too, argued in the letter that the legislation gives "exorbitant tax breaks to those wealthy enough to buy high-priced cars and trucks."

Kildee's office argued every automaker making electric vehicles will benefit from the proposal and that the tax credit is designed to align with President Joe Biden's promise not to raise taxes on people making less than $400,000. 

"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," Kildee said in a statement. "American tax dollars should be used to support American jobs.”

Republicans largely oppose the push to expand incentives, arguing the policy favors wealthy car buyers and tips market scales in favor of technology with weak supply chains for vehicles that consumers aren’t yet demanding.

GOP members are not expected to vote for the $3.5 trillion social spending plan that Democrats plan to pass along party lines using a “reconciliation” budget process, which allows them to overcome the 60-vote filibuster threshold needed to pass most legislation in the Senate.

Currently, electric vehicle buyers can qualify for a $7,500 tax credit only for manufacturers that have sold fewer than 200,000 total EVs. That’s pushed General Motors and Tesla out of the running for the incentive. There’s also no maximum vehicle price or income cap.

Democrats will need to remain in lockstep to pass the legislation without the help of any Republicans. They have a 220-212 majority in the House and a razor-thin 50-50 majority in the Senate, with Vice President Kamala Harris casting the tie-breaking vote.

The updated legislation was negotiated between Democrats in the House, Senate and White House before being revealed in committee, Kildee said. Michigan Sen. Debbie Stabenow, D-Lansing, has been spearheading the policy in the Senate. 

The House committee will consider the bill this week and is expected to vote on whether to include it on Wednesday. 

Biden has called for $174 billion for U.S. manufacturers to “win” the electric vehicle market, which is expected to grow rapidly in coming years. His original proposal included $100 billion in consumer incentives and $15 billion to build a nationwide network of EV charging stations.

A $1 trillion bipartisan infrastructure bill includes $7.5 billion for EV charging stations and $2.5 billion for electric buses.