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Two U.S. senators talking to Manchin about objections to EV tax credit

·3 min read

By David Shepardson

TAYLOR, Michigan, Nov 29 (Reuters) - Two Democratic U.S. senators said on Monday they are in talks with a key fellow Democrat over his objections to a proposal to provide a $4,500 tax incentive for union-made U.S. electric vehicles as part of the "Build Back Better" legislation before the Senate.

Earlier this month, Democratic Senator Joe Manchin said he opposed the credit https://www.reuters.com/business/autos-transportation/toyota-investing-240-million-west-virginia-build-hybrid-parts-2021-11-11, calling it "wrong" and "not American."

The EV tax credits are backed by President Joe Biden, many congressional Democrats and the United Auto Workers (UAW) union and would disproportionately benefit Detroit's Big Three automakers - General Motors Co, Ford Motor Co and Chrysler parent Stellantis NV - which assemble their U.S.-made vehicles in union-represented plants.

The bill, however, does away with phasing out automakers' tax credits after they hit 200,000 electric vehicles sold, which would make Tesla Inc, the largest maker of electric vehicles, eligible again for the base $7,500 credit but not for the $4,500 bonus because employees at its U.S. plants are not union members.

Senator Debbie Stabenow of Michigan told Reuters on the sidelines of an event about the semiconductor shortage that she strongly supports the union EV credit, "but we know we're going to have to work something out with (Manchin)."

In the evenly divided Senate, every Democratic vote is considered crucial to passage of the bill, which aims to bolster the social safety net and fight climate change. The House of Representatives passed the $1.75 trillion bill earlier this month, which includes the union bonus.

Asked if the final provision could include a smaller union bonus or revision that could make other automakers eligible with high labor standards, Gary Peters, Michigan's other U.S. senator, told Reuters: "I think a lot's on the table right now."

He declined to offer details of his talks with Manchin, saying, "I wouldn't want to negotiate in public as to what it's going to look (like) but it's likely to change."

Peters said he is committed to the union EV credit: "We're going to continue to press for that but it's still uncertain."

Manchin's office did not immediately comment.

Japan's Toyota, which has a plant in West Virginia but whose employees are not union members, has been lobbying heavily against the proposed $4,500 union credit.

UAW President Ray Curry said Monday the union EV credit proposal "is alive and well and we're going to keep pushing for that."

The social spending and climate bill being considered in Congress includes up to $12,500 in tax credits for U.S.-made EVs, including the $4,500 union provision. Vehicles would have to be made in the United States starting in 2027 to qualify for any of the $12,500 credit, which also includes a $500 credit for a U.S.-made battery. (Reporting by David Shepardson; Editing by Leslie Adler)