Automakers Protest Extra Tax Credit for EVs Made by Union Workers

Tesla has a reputation for being anti-union, including accusations that Elon Musk attempted to intimidate union organizers and a brief fight with one German automakers’ union over the union’s complaints related to Tesla hiring a factory manager for Gigafactory Berlin away from Mercedes-Benz. Now Tesla is joining other automakers like Toyota and Honda to protest a proposed additional tax credit for electric vehicles purchased from companies that have a strong union presence.

The companies say that the proposed $4,500 in tax credits hurts competition and unfairly favors other companies like General Motors, Ford and Stellantis, all of which have unionized hourly-wage employees represented by the United Auto Workers union and have gone on record as supporting the extra tax credit for union-made vehicles. The total of $12,500 in tax credits were proposed by the U.S. House Ways and Means Committee as part of its discussion of a $3.5 trillion infrastructure bill.

The proposal also limits the tax credit to a maximum vehicle price of $55,000 for cars and $74,000 for trucks. The Tesla Model S Standard Range Plus starts at $39,990 and the Model Y Long Range starts at $53,990. With customizations and options, it would be easy for buyers of these vehicles to rapidly exceed the cap to be eligible for the tax credit.

Elon Musk was characteristically quick to criticize the additional tax credit for union-made cars, seeming to refer to’s recent placing of two Tesla models in the Top Three of its list of most American-made vehicles. Known among Elon Musk watchers for its efforts to control as much of its supply chain as possible, Tesla manufactures many of the batteries and components used to manufacture vehicles at the Gigafactory near Fremont, California, at a nearby factory. The proposed tax credit for purchases of American-made vehicles was reportedly reduced to just $500.

By way of comparison, most of Ford’s electric Mustang Mach-E sold in the United States are made in Mexico. It does plan to start manufacturing the electric F-150 and Transit in the United States next year.

Toyota was quick to echo complaints about the proposal being anti-competitive by working against automakers that aren’t unionized. It wrote in an open letter to the Ways and Means committee:

“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.”

The automakers’ lobby organization Autos Drive America also came out against the proposal, saying that it would create an “unlevel playing field that will limit consumer choice and punish non-unionized American workers, their families, and their communities.”

President Biden has notably snubbed Elon Musk and Tesla despite the president’s claims to support efforts to move away from fossil fuels to fight climate change. Most recently, his administration did not send Tesla an invitation to a summit for electric vehicle manufacturers hosted at the White House, leading to speculation that Biden plans to favor unionized automakers regardless of whether they make significant investments in the development and manufacturing of electric vehicles or not.