Toyota and Honda Feel Left Out of America's EV Tax Credit Plan
Serena Aburahma
· 4 min read
For those interested in buying an
electric vehicle
(EV), there may soon be even more incentives for you to do so. Tax credits already exist to lower the cost of EVs, but a bill was introduced to introduce an additional credit. However, the new EV tax credit plan leaves out Toyota and Honda.
According to
Reuters
, the new tax credit plan would only apply to union-made electric vehicles. Toyota and Honda production facilities in the United States are not unionized, so their vehicles would not be eligible for the new credits.
The new electric vehicle tax credit proposal
Currently, those who purchase a hybrid or electric vehicle are eligible for a tax credit of up to $7,500. The new proposal will add a credit of up to $4,500, which will be added to the existing credit. With these two credits and additional credits, some EVs are eligible for a total of $12,500 in tax incentives.
This plan was proposed by Democrats in the House of Representatives and is part of an overall Democratic effort to increase sales of electric vehicles. President Biden has been adamant about widespread conversion to EVs, and they were an important part of his proposed infrastructure bill.
What sets this new tax credit proposal apart from other electric vehicle incentives is that it is also created to encourage unionized jobs. If the proposal is passed, only electric vehicles made by union workers would be eligible.
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Why are Honda and Toyota against this?
MORE: Not All EVs Are Created Equal: Which Ones Are the Most Efficient?
Toyota and Honda would be left out of the newest electric vehicle tax credit program because of the union requirement. Unlike workers for some other manufacturers, Honda and Toyota workers are not part of the United Auto Workers (UAW) or other auto unions.
Both Honda and Toyota have publicly criticized the proposed credit program for this reason.
The two manufacturers argue that it is unfair to workers who may choose to not join a union. Though, they could also be against the proposal because it would give an advantage to manufacturers who would benefit from the credit.
While both Honda and Toyota may not qualify for this new tax credit, they are both committed to producing electric vehicles. Toyota had previously been slow to shift to electric relative to the competition, but they have recently invested in EV production.
Manufacturers that would benefit from this tax credit
MORE: The Ford F-150 Lightning Has 1 Huge Advantage Over Every Other Electric Truck
The Big Three in Detroit (Ford, Stellantis, and GM) would all benefit from the proposed tax credit.
Workers at their production facilities are members of the UAW, so their vehicles would qualify for the credit. As manufacturers work to get ahead of the competition in the electric vehicle race, this could give these companies an advantage.
One American EV manufacturer that would not fully benefit from the tax credit is Tesla. Much like Honda and Toyota, Tesla workers are not members of an auto workers union. However, Tesla vehicles would qualify for other tax credits under the proposed bill for up to $8,000.
Outside of the union membership stipulation, the new tax credit bill would also eliminate a key limitation in current EV tax credits. Manufacturers are currently ineligible for tax credits after they sell 200,000 electric vehicles. GM and Tesla would both benefit from this.
Tax credits for electric vehicles can be helpful for drivers who are interested in switching from gas to electric, but they can also be complicated. When you want to save money on car insurance, though, it doesn't have to be difficult.
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