Energy Secretary Granholm defends limiting EV tax credits to unionized automakers, leaving Tesla out
Granholm cited President Biden's commitment to unions as the reason for exclusion of non-unionized EV manufacturers.
In an effort to spur the uptake of electric-powered vehicles and begin the process of weaning the country off of fossil fuels, the Biden Administration announced a new proposal on Thursday that would grant buyers of new American-built electric vehicles a substantial tax credit. The proposal as planned only offers eligibility for manufacturers who use unionized labor, leaving Tesla Motors, the country’s largest producer of such vehicles, out in the cold. Energy Secretary Jennifer Granholm defended the proposal against critics on Friday, citing the Administration’s desire to improve worker compensation and working conditions by way of unionization.
“This president is very, very favorable toward organized labor because organized labor has raised the standard of living of so many Americans and we want to make sure that we do everything possible to encourage that business and labor really focus on elevating the standards for everyday Americans,” Granholm explained to CNBC.
The White House proposal would offer eligible buyers a tax credit on electric vehicles made on U.S. soil with unionized labor. An example scenario was offered where a middle-class family could expect a credit of $12,500. Such a credit would easily offset the price difference between electric and combustion variants of the same car model and place a new electric car within affordability for a greater number of Americans.
Tesla Motors customers would be ineligible for the tax credit as proposed, despite the California-based company beating its largest competitors to market by years and helping to popularize the electric vehicle in the mainstream. Still, Tesla’s current offerings are still priced out of the reach of millions of potential buyers. Such a large tax credit would greatly help to bring Tesla offerings in line with popular combustion engine competitors.
While Tesla vehicles could be eligible for the proposed credits if it were to employ union workers at its production facilities, CEO Elon Musk maintains that unionization isn’t the best option for his company. Earlier this March, Tesla Motors was ordered by the National Labor Relations Board to ask Musk to remove a tweet deemed threatening and anti-union. Because Tesla's financial filings consider Musk’s tweets to be official company communication, they are subject to government oversight. In the post, Musk explained that his employees were free to unionize, but claimed the endeavor would be fruitless because the employees would only stand to lose stock options with negligible or no other gain.
There is a battle for electric vehicle supremacy on the horizon. Tesla Motors currently holds a commanding lead, but the future remains uncertain as the old guard begrudgingly waddles its way towards a greener future. While the tax credits give the latecomers an advantage, there are no guarantees that strong initial sales can replace the years of experience Tesla Motors has accrued while establishing the modern electric vehicle market.
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