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Manchin Opposes Bonus EV Tax Credit for Union-Made Cars

Bloomberg logoBloomberg 11/11/2021 Keith Laing
West Virginia Senator Joe Manchin Holds News Conference © Bloomberg West Virginia Senator Joe Manchin Holds News Conference

(Bloomberg) -- Senator Joe Manchin said Thursday that he opposes a provision of President Joe Biden’s $1.75 trillion social spending and tax plan that would offer $4,500 more in tax credits for the purchase of an electric vehicle made in the U.S. by union labor. 

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The West Virginia Democrat called the extra credit “wrong” and “not who we are” as a country. 

Manchin, made the comments during an appearance at Toyota Motor Corp.’s factory in Buffalo, West Virginia. The plant, like the Japanese automaker’s other factories in the U.S., is non-union.

Opposition by Manchin, a key swing vote in the closely divided Senate, could endanger the labor-friendly provision that Biden has publicly endorsed. The credits are in a draft House bill that is poised to receive a vote as soon as next week, pending an official estimate of the bill’s cost from the Congressional Budget Office.

Toyota has lobbied against labor-friendly provisions of the bill. Manchin, who said he drives a hybrid Toyota Highlander, told reporters at the event that he is opposed to any electric vehicle tax credit that allows some automakers to offer more discounts on electric cars than others. 

“To take $4,500 of taxpayers’ money and give it to incentive is wrong in any condition. Anywhere in this country. It’s not who are,” Manchin said, according to a video taken by a Toyota contractor that was earlier reported by Automotive News. 

“It’s not how we built this great country,” he said. “We don’t pick winners and losers by using everybody’s tax dollars. You pick winners and losers by the products you put out and the value you put out for those products, and making sure the workers are rewarded properly with good pay, good benefits and a safe working condition. And that’s what I care about.”  

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Manchin added in the video, however, that his opposition to the union provision might not determine his vote on Biden’s tax-and-spending plan. 

“I haven’t made up my mind on any of this,” Manchin said. “We’re still in negotiation stages. But that is very much concerning.” 

Senator Debbie Stabenow, a Michigan Democrat, and other Detroit-area lawmakers have pushed for the provision. She defended the union-specific credit, saying in a statement released on Thursday evening: “There’s nothing more American than supporting the opportunity for workers to collectively bargain for good pay and benefits no matter where they live and what company they work for.” 

Manchin’s office had no further comment. The senator was at the factory touting a $240 million investment to add a production line of hybrid transaxles. 

The House draft calls for all automakers to be able to offer $7,500 to consumers for EV purchases for the first five years of the law, a win for Tesla Inc. and General Motors Co., which have already exceeded the existing, 200,000-vehicle cap after which their customers no longer get credits.

However, cars made in the U.S. by union-represented workers would be allowed to offer an additional $4,500 in credits according to a draft text of the bill released by the House that is subject to further negotiation. Tesla and foreign-owned automakers such as Toyota and Honda Motor Co. have argued that would give an unfair advantage to Detroit automakers as the industry races toward an electric future.

200,000 Limit

Current law limits automakers to 200,000 tax credits for electric vehicles. Two companies, General Motors and Tesla, have been capped out of the $7,500 tax credits since 2018. Toyota is likely to be the next company to hit the limit, according to an analysis by BloombergNEF. The Japanese automaker has sold approximately 161,000 electric cars in the U.S. as of the second quarter of 2021, according to the analysis. 

Biden is scheduled to visit a GM plant in Detroit that makes electric vehicles on Wednesday to promote the infrastructure bill that passed Congress last week.

Foreign-owned automakers that oppose the union-specific tax credit hailed Manchin’s comments.

“This provision has been a big deal for half of the U.S. auto industry that is non-unionized – now it’s a big deal in the Senate,” Jennifer Safavian, President and chief executive officer of Autos Drive America, which lobbies for foreign-owned automakers, said in an emailed statement.

(Updates with Stabenow comments in paragraph 10.)

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