EV push by Joe Biden may hit roadblock within even as Canada, Mexico up pressure

US President Joe Biden wants to offer tax credits to union-made electric vehicles in the country but while his plans have come under heavy criticism from Canada and Mexico due to allegations of ‘protectionism’, the policy bill could also face roadblock in the US Senate. This after Reuters reported that a Senate Democrat has voiced his opposition to the bill.

File photo of US President Joe Biden. (REUTERS)
File photo of US President Joe Biden.

Reuters reported that West Virginia's Joe Manchin is against supporting the bill which is also called Build Back Better. He is believed to have called it ‘wrong’ and ‘not American’.

Manchin's opposition could delver a fatal blow to Biden's plans which have anyway come under scrutiny from neighboring countries as well as EV players within the US, Tesla being the most notable.

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At present, an amount up to $7,500 is offered as EV tax credit but the bill Biden wants to push through aims to take this up to $12,500 for union-made US EVs. The eventual aim is for 50% of all new vehicles sold within the US to be either electric or plug-in hybrid by 2030.

But Canada and Mexico have warned of retaliatory measures if US pushes through with the bill. This is possibly because a number of car brands have plants in these two countries and a special incentive within the US for union-made EVs here could see demand for such EVs replacing demand for units coming in from Canada and Mexico.

Earlier this month, Canada's Deputy Prime Minister Chrystia Freeland, in a letter to US senators, stated that Ottawa is 'deeply concerned' by the EV tax credit. The letter said that this move violets the United States-Mexico-Canada Agreement and is being seen as a major threat to the Canadian automotive industry.

Mexico isn't smiling either. "This bill is not consistent with the US obligations under the TMC and the rules of World Trade Organization. We would apply trade reprisals," said Tatiana Clouthier, Mexico's Secretary of the Economy. (Read full report here)

There have been opposition in varying degree from Japan and European Union too.

The likes of Tesla and Toyota too aren't gung ho about the tax credit proposal either. Tesla does not have unions representing assembly workers. Toyota does have a plant in West Virginia but its employees aren't union members. The opposition, therefore, is understandable.

First Published Date: 20 Dec 2021, 10:09 AM IST
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