Toyota, Honda Voice Opposition to Proposed Tax Credit Bill

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【Summary】The proposed bill gives massive incentives to shoppers that purchase a union-made electric car that’s assembled in the United States, leaving brands like Toyota, Honda, and Tesla out of the mix.

Original Vineeth Joel Patel    Oct 25, 2021 4:00 PM PT
Toyota, Honda Voice Opposition to Proposed Tax Credit Bill

Recently, Democrats in Congress introduced a new bill that would drastically increase the federal tax credits for an electric vehicle. The proposed bill is a part of President Joe Biden's $3.5 trillion spending bill and would help with the adoption of electric vehicles in the country. The bill lays a plan out for consumers to take advantage of a $12,500 federal tax credit on EVs, but only for electric cars that are assembled in the U.S. by employees covered by a union. For Toyota, Honda, and Tesla, that means their vehicles are excluded from the list.

The Union-Based Issue

The whole "union-made" clause is what's eating away at Toyota and Honda. It's probably upsetting Tesla, but since the automaker doesn't have a public relations department, there's no way to know what it's thinking. Since Toyota and Honda do have PR teams, they're more than happy to share their thoughts on the proposed bill and neither automaker is happy about it.

According to Reuters, Toyota stated that the bill discriminates "against American autoworkers based on their choice not to unionize" in a statement. In a statement of its own, Honda said the bill was "unfair" and stated that it "discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union… The Honda production associates in Alabama, Indiana and Ohio who build our EVs deserve fair and equal treatment by Congress."

The bill separates automakers into two clear groups: ones with unions and others without. General Motors, Ford, and Stellantis are all quiet on the front, because the plants that their vehicles are built at are represented by the United Auto Workers union. Honda, Toyota, and Tesla's employees are not represented by a union. While EVs from the three American automakers are eligible for the full $12,500 tax credit under the new bill, Tesla's will be eligible for up to $8,000.

The Bill Is About The Future

Seeing as how unions work to help improve the lives of workers by helping to get them larger wages, improved work hours, and better working conditions, we think unions are a good thing for employees in the auto industry. The UAW, though, came under fire a few years ago for an embezzlement scheme. So, while employees deserve to be part of a union, there's a decision on whether the UAW is the right union for all automakers. Reuters points out that Tesla and foreign automakers have fought efforts by the UAW to organize unions at its plants in the U.S.

UAW President Ray Curry, understandably, sees the proposed bill as a good thing, claiming that it "would go a long way in supporting-good paying union jobs in (the) EV auto sector that President Biden has championed."

Toyota also stated that it will "fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers who can't afford high-priced cars and trucks."

While we understand why Toyota and Honda are upset, these are two automakers that have been very slow to come out with all-electric vehicles. With the decision to discontinue the Clarity Fuel Cell and Clarity Plug-in Hybrid models earlier this year, Honda doesn't sell an electric or plug-in hybrid vehicle in the U.S. Toyota, on the other hand, has quite a few hybrids and PHEVs — and even a fuel-cell vehicle with the Mirai — but doesn't have an all-electric option on sale. Both automakers are looking into EVs, so the new bill would impact their popularity with American consumers.

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