Latest US electric vehicle (EV) tax-credit plan slammed by Elon Musk and other automakers

Elon Musk on his phone

The U.S. House Democrats unveiled a new 10-year proposal on Friday that would give union-made electric vehicles (EVs) higher subsidies than those made by non-unionized employees.

Under the terms of the proposed deal, EVs made at a unionized factory would receive an additional $4,500 tax credit. That amount would be over and above the $7,500 base incentive.

The deal was sharply criticized as favouring the traditional Detroit automakers – General Motors (GM), Ford, and Stellantis (formerly Fiat Chrysler).

One of those critics was Elon Musk. The Tesla CEO took to Twitter to say the plan looked as if it was written by lobbyists for the United Auto Workers Union (UAW) and Ford and is not in the best interests of American taxpayers.

Tesla wasn’t the only automaker to voice opposition to the proposed plan.

Rivian released a statement on Sunday saying the tax credit was a “step in the right direction,” but did not agree with its limits.

“Rivian supports a straightforward expansion without artificial limits to encourage EV adoption to as many households as possible,” Rivian said in a statement.

A surprising critic was Toyota, which has shown reluctance to accept a future filled with EVs. The Japanese automaker said the deal puts American automakers at a disadvantage “based on their choice not to unionize.”

The company added they will “fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers.”

Other details of the proposed plan include: (via Bloomberg)

  • Elimination of the current cap of 200,000 vehicle per manufacturer for tax credit, a decision that would help GM and Tesla
  • Credit would only apply to vehicles that have a manufacturer’s suggested retail price of less than $55,000 for a car, $64,000 for a van, $69,000 for an SUV and $74,000 for a pickup truck
  • Credit would have annual income limitation of $400,000 for an individual, $600,000 for heads of household and $800,000 for couples
  • Starting in 2027, the $7,500 base credit would apply only to EVs built in the U.S.
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