Following Canada and Mexico, the European Union expressed concern and opposition to the US Senate’s ‘Made in USA’ electric vehicle tax credit proposal. Some automakers have also criticized the proposed move, including American Honda, Toyota and Volkswagen Group of America.
In summary, the Biden administration is proposing an electric vehicle tax credit. Nothing new, this type of incentive is already common in other countries, including several countries in the European Union. Where the shoe pinches and provokes an outcry is that applying the measure would be protectionist and discriminatory because it would give higher credit to electric vehicles built in a factory represented by a union with batteries made in the United States will. According to the opponents cited above, this is a discriminatory and unfair measure.
In fact, that tax credit would amount to $12,500 for “Made in USA” vehicles instead of $7,500 for the base credit for all EVs. A baseline incentive that after 5 years would be reserved for US-assembled vehicles only.
The European Commission, through the voice of Valdis Dombrovskis, EU Trade Commissioner, is therefore condemning this tax credit project proposed by the Biden government and asking the American Senate to remove the discriminatory elements.
“We agree that tax credits can be important incentives to boost demand for electric vehicles. Many EU member states also use these incentives. However, we also believe that these tax incentives should be fair and avoid any discrimination between automakers. (W Dombrovskis)
As it stands, this proposal would limit consumer choices, discriminate against European cars and components, and break basic WTO (World Trade Organization) rules. In addition, it could disrupt supply chains and harm American workers at European automakers’ US assembly plants.
This Democrat proposal not only offends foreign “partners,” as Democratic Senator Joe Manchin – West Virginia, a coal-producing region – called the proposal “bad and un-American.” Outside of the United States, foreign manufacturers are also opposed to this measure, as are major players in the American market, starting with the American division of Honda, the Volkswagen Group and Toyota. Finally, Autos Drive America, which represents the American operations of international automakers, and the American International Automobile Dealers Association have also expressed their opposition to this proposal.