$12,500 EV tax credit, union-built bonus included in plan Biden claims can pass Congress

A maximum $12,500 federal EV tax credit, including a bonus for union-made vehicles, appears to have survived the negotiation process and is now a likely part of the infrastructure bill. In its current form, the framework still includes a tax credit that “will lower the cost of an electric vehicle that is made in America […]

A maximum $12,500 federal EV tax credit, including a bonus for union-made vehicles, appears to have survived the negotiation process and is now a likely part of the infrastructure bill.

In its current form, the framework still includes a tax credit that “will lower the cost of an electric vehicle that is made in America with American materials and union labor by $12,500 for a middle-class family,” the White House confirmed Thursday in a press release.

“President Biden is confident this is a framework that can pass both houses of Congress, and he looks forward to signing it into law,” the release said.

2022 Bolt EV assembly - battery marriage

2022 Bolt EV assembly – battery marriage

The $12,500 figure was first proposed in the Senate version of the reconciliation spending bill. Both the Senate and House versions would keep the current $7,500 federal tax credit, but with vehicle price caps and, in the case of the House version, an income cap. Both versions also included a union-made bonus, previously discussed as $4,500 in the House version and $2,500 in the Senate version.

The union labor requirement has received a significant amount of pushback, including from automakers with non-union factories. Volkswagen Group of America CEO Scott Keogh was the latest to voice criticism, calling the union bonus “fundamentally wrong.” That followed pushback from Tesla, Toyota, Honda, and others.

On the other hand, the seemingly locked-in bonus could be a win for the United Auto Workers. It builds on a years-long focus from the union on not letting its workforce fall in the shift to electric vehicles.

2022 Chevrolet Bolt EUV

2022 Chevrolet Bolt EUV

However, it’s worth noting that, today, only one electric car would qualify for a union-made tax credit. And it’s currently on a production hold.

The Chevrolet Bolt EV is built (along with the related Bolt EUV) at General Motors’ unionized Orion Assembly plant in Lake Orion, Michigan. But sales have been halted as GM undertakes a massive battery recall to address two manufacturing flaws, which have led to more than a dozen fires.

Other UAW-made EVs are on the way, though, including the Ford F-150 Lightning, GMC Hummer EV, and Chevy Silverado EV (all slated to be built in Michigan), and the Cadillac Lyriq, which will be built in Tennessee.