US EV tax bill favouring General Motors, Ford to undergo review by Senate

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A proposal backed by US President Joe Biden to give an extra tax break of $4,500 for the purchase of union-made, US-built electric vehicles will undergo a review by the Senate parliamentarian who will determine whether the bill qualifies under budget rules as part of nearly $2 trillion economic package.

The bill has drawn flak from those opposing it as Tesla CEO Elon Musk, Senator Joe Manchin and trade officials in Canada, Mexico and the European Union. The bill will be reviewed by the office of Elizabeth MacDonough along with other tax credits contained in a $1.75 trillion spending bill passed by the House and now under consideration in the Senate.

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If the bill happens to violate the country’s Byrd Rule, which prohibits the use of budget reconciliation to advance policy changes with “merely incidental” budgetary impacts, the Senate will not pass it. This will lead to the Democrats drawing board or scuttling the measure.

Earlier this week, Musk said at the WSJ CEO Council Summit that the US EV tax bill should not be passed. “Honestly, it might be better if the bill doesn’t pass. I’m literally saying get rid of all subsidies,” he said, adding that the government just tries to get out of the way and not impede progress.

The US EV tax bill benefits Detroit’s Big Three automakers – General Motors, Ford Motor and Stellantis, the parent of Chrysler. All these auto makers assemble their US-made vehicles in UAW-represented plants. Those facing a loss are the likes of Tesla and other foreign automakers operating in the country who do not have unions representing assembly workers.

The bill has also faced opposition from from Manchin, a West Virginia Democrat who serves as a powerful swing vote and has a non-union Toyota Motor plant in his home state.

(with inputs from Bloomberg)

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