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Manchin objects to federal tax credit for union-made electric vehicles, a provision of Biden’s social spending package

President Biden takes an electric vehicle for a spin around the South Lawn of the White House on Aug. 5 after discussing the administration's clean-car initiatives. (Bill O'Leary/The Washington Post)

Sen. Joe Manchin III (D-W.Va.) said Thursday that he opposes a provision of President Biden’s social spending bill to give a $4,500 federal tax credit for union-made electric vehicles, calling the incentive “wrong” and “not American.”

According to Automotive News, the senator said the tax credit in the roughly $2 trillion proposal to overhaul the nation’s health care, education, immigration, climate and tax laws “can’t happen,” putting him at odds with fellow Democratic Sen. Debbie Stabenow (Mich.), a chief sponsor of the provision.

“We shouldn’t use everyone’s tax dollars to pick winners and losers,” Manchin told Automotive News. “If you’re a capitalist economy that we are in society then you let the product speak for itself, and hopefully, we’ll get that, that’ll be corrected.”

Manchin made the comments during an event in Buffalo, W.Va., where he was celebrating a $240 million investment from Toyota Motor West Virginia.

His comments came as the White House announced that President Biden will tour a General Motors Factory ZERO electric vehicle assembly plant in Detroit next Wednesday. At the factory, Biden will talk about how his infrastructure plan will accelerate the expansion of electric vehicle charging stations, reduce emissions and create union jobs, according to a White House advisory.

In 2021, Sen. Joe Manchin III (D-W.Va.) changed his top line spending number for President Biden’s agenda more than half a dozen times. (Video: JM Rieger/The Washington Post, Photo: Jabin Botsford/The Washington Post)

The transportation sector is the nation’s biggest contributor to climate change. Biden is calling for half of new cars to be electric or plug-in hybrids by the end of the decade.

Democrats’ roughly $2 trillion social spending package includes multiple programs designed to curb climate change, among them an initiative that would provide a $7,500 tax credit to consumers who purchase electric vehicles through 2026. After 2026, only those who purchase U.S.-made electric vehicles would qualify for the $7,500 credit. More notably, consumers who purchase union-made electric vehicles would receive a bonus $4,500 federal tax credit.

According to the Associated Press, the only assembly plants that currently meet those criteria are owned by General Motors, Ford Motor, and Stellantis, Chrysler’s parent company. All three are based in Detroit.

Manchin, in the interview with Automotive News, said he brought up his concerns about the tax credit to Stabenow, whose response, he said, was “not good.”

“When I heard about this, what they were putting in the bill, I went right to the sponsor [Stabenow] and I said, ‘This is wrong. This can’t happen. It’s not who we are as a country. It’s not how we built this country, and the product should speak for itself,” Manchin said.

In response Thursday, Stabenow highlighted how she had worked with Manchin on an issue dear to the West Virginia senator — mine workers — and said her provision that would benefit union-member autoworkers was no different.

“Senator Manchin and I work together on many issues, and I was proud to stand with him two years ago to help the members of the United Mine Workers of America union in West Virginia. At that time, some argued his bill was unfair and was picking winners and losers. But we rejected that argument and stood together to protect union pensions,” she said. “This issue is no different. Standing up for hard-working Americans is always the right thing to do.”

In a Senate divided 50-50 between Democrats and Republicans, Biden and Democrats can’t afford to lose Manchin’s vote as they try to secure passage of the social spending bill. Already, a provision in the bill that would have encouraged the transition away from coal to solar, wind and nuclear generation was dropped at his insistence.

This month, Manchin also whittled down another part of Democrats’ plan to incentivize the sale of thousands of new electric cars. Democratic leaders had proposed allowing Americans to claim the full tax credit if they make less than $400,000 a year individually or $800,000 as a couple.

But Manchin expressed concerns those income thresholds were too high. Democrats ultimately lowered the threshold to $250,000 for individuals and $500,000 for couples.

Lowering the caps would save the government money but may result in fewer purchases of electric cars. But in an interview last week, Stabenow defended the change, arguing the lower threshold is “reasonable and maintains the emissions reductions we need.”

A spokesman for Manchin did not immediately respond to a Post request for further comment on their conversations.

Biden’s Wednesday trip to Detroit marks a stark contrast to Manchin’s opposition. The unionized factory is one of the few in the United States that assembles electric vehicles, so a consumer who bought a car made there would qualify for the bonus tax credit.

Nonunion automakers including Toyota, Honda and Tesla have criticized the $4,500 credit, with Toyota calling it “blatantly biased” and “unfair.”

General Motors, meanwhile, will mark Biden’s visit by holding the grand opening of its “Factory ZERO,” a plant that was repurposed to build electric trucks and SUVs.

Dino Grandoni contributed to this report.

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