Democrats in Congress recently revealed a sweeping reform of the federal zero-emission vehicle tax credit. The plan eliminates the current limit that phases out credits for automakers that have sold over 200,000 qualifying EVs, caps the sticker price of eligible cars, allows buyers to deduct the credit at the time of purchase, and would be limited to American-made cars starting in 2027. But the most controversial restriction has to do with union labor.
While the new bill is largely an extension and refinement of the current $7500 tax credit for battery-electric (and other zero-emissions) vehicles, it adds a $500 incentive for vehicles that use U.S.-built batteries, plus an additional $4500 credit exclusively for EVs built with unionized labor.
That last stipulation heavily favors the Big Three American auto manufacturers, all of which operate unionized factories in the United States. Notably, it excludes Tesla, Rivian, and every foreign automaker that operates a U.S. assembly plant, none of which are unionized. That means that, for example, a U.S.-built Ford EV would receive up to $12,500 in federal rebates, while a U.S.-built BMW EV would cap out at $8000. For the full story, check out this article from Road & Track.