Toyota and Honda Condemn New EV Tax Incentive Plan

Honda and Toyota have expressed disappointment about a proposed plan to provide additional tax credits to U.S. buyers for union-built electric vehicles. (Honda)

Toyota and Honda are speaking out against a proposed tax-credit plan that increases the tax incentive for electric vehicles, but only if they are union-built. The plan, set for a vote by the Democratic-led House Ways and Means Committee, would boost the current maximum federal tax credit up to $12,500 from the existing $7,500. However, to qualify, the electric vehicle (EV) must be made in a U.S.-based, union-represented auto plant. As written, the bill will benefit the Big Three automakers—GM, Ford, and Chrysler parent Stellantis—whose plants are unionized. Honda, Toyota, and Tesla's plants are not.

Honda reacted by releasing a statement that called the bill "unfair" and insisted that "the Honda production associates in Alabama, Georgia, Indiana, and Ohio who build our EVs deserve fair and equal treatment by Congress." Toyota told Reuters that it believes the plan to be discriminatory "against American autoworkers based on their choice not to unionize."

The proposal limits EV tax credits to cars priced under $55,000 and trucks priced up to $74,000. Toyota claims 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."

The plan also includes a measure to end the expiration of an automakers' tax credit once they sell 200,000 electric vehicles. Under this measure, Tesla and General Motors would become eligible again. These incentives are vital to companies such as Volvo, Audi, and Mercedes, who are in the process of phasing out internal combustion engines.

Estimated to cost between $33 billion and $34 billion over ten years, the proposal also includes a $500 credit for batteries produced in the United States. The bill is a part of President Joe Biden's plan to make EVs 50% of U.S. vehicle sales by 2030.

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