Congressional Democrats and the Biden White House have pushed that electric vehicle consumers receive a US$12,500 refundable tax credit if they purchase an EV made at a United States factory employing unionized workers. The subsidy declines to US$8000 if the vehicle is made at a non‐union American plant and it drops another US$500 if the car’s battery is not US‐made.
Then starting in 2027, only EVs assembled in the United States would qualify for the base $7,500 credit.
So what are the real objectives of the new US EV tax credits?
The EV tax credit might make for good politics for the union‐friendly Democrats, but the subsidy defies the United States’ international trade agreements, and potentially undermining the very environmental objectives they are intended to achieve.
Both Canada and Mexico have strongly objected, as has the American International Automobile Dealers Association (AIADA) and other groups.