Biden pushes tax breaks for electric vehicles

[WASHINGTON] US President Joe Biden will visit a Michigan General Motors electric vehicle plant next week as the White House pushes Congress to approve big tax incentives for zero-emission vehicles.

The largest US automaker said its "Factory Zero" will mark its grand opening during Biden's visit Wednesday (Nov 17). The plant, spanning parts of Detroit and Hamtramck, actually opened in 1985 but GM said in 2020 it would repurpose it to build electric trucks and SUVs.

Biden will discuss US$7.5 billion in funding for EV charging stations in a recently approved infrastructure bill, as well as how EVs will reduce emissions, improve air quality and create "good-paying, union jobs across the country", the White House said.

GM chief executive Mary Barra will attend Wednesday's event.

In August, Biden signed an executive order aimed at making half of all new vehicles sold in 2030 electric. The 50 per cent target, which is not legally binding and includes plug-in hybrid models with gasoline engines, won backing of US and foreign automakers, which said achieving it would require billions of dollars in government funding.

A proposed US$1.75 trillion social spending and climate bill includes an EV tax credit of up to US$12,500, including a US$4,500 incentive for union-made vehicles and US$500 for US-made batteries. Cost of the tax credit is estimated at US$9.6 billion over 10 years.

It also includes new EV used car tax credits, US$3.5 billion in grants for automakers to convert existing plants to electric vehicles and components and US$9 billion for the US government and Postal Service to buy EVs and charging infrastructure.

On Thursday (Nov 11), key Democratic Senator Joe Manchin expressed opposition to the union EV provision.

Biden has repeatedly refused to back any specific date to phase out new petrol-powered vehicles. The United States did not join some other countries in Glasgow in backing a phase-out by 2040.

The EV tax credits would disproportionately benefit Detroit's Big Three automakers - GM, Ford Motor and Chrysler-parent Stellantis - which assemble their US-made vehicles in union-represented plants.

Foreign automakers have harshly criticised the decision to give union-made vehicles a leg up.

The Democratic proposal eliminates phasing out tax credits after automakers hit 200,000 electric vehicles sold, which would again make GM eligible, along with Tesla.

Tesla and foreign automakers do not have unions representing US factory workers and many have fought UAW efforts to organise US plants.

GM in 2020 said it was renaming its Detroit-Hamtramck Assembly plant "Factory Zero" as it announced a US$2.2 billion investment to shift the factory to EVs. The GM plant has built more than 4 million vehicles.

In September, Detroit won a US$4 million US Commerce Department grant to reconstruct deteriorating roads in support of Factory Zero.

REUTERS