US Senate is considering changes to extra $4,500 incentive for electric vehicles built at union factories

The US Senate is reportedly considering changes to the extra $4,500 incentive for electric vehicles built at union factories in the US that is part of the Build Back Better act.

It comes as several countries are pushing to stop the proposal.

The US Senate is now discussing the Build Back Better Act, which includes a much-needed reform of the federal EV incentive.

But it also includes a more controversial $4,500 additional incentive for electric cars made by unions in the US.

It has caused controversy for reasons including putting automakers who don’t have unionized workforces at a disadvantage even if the employees don’t want to unionize. Several countries have criticized the proposition as a protectionist initiative.

Last week, Canada sent a delegation led by Mary Ng, Canada’s minister of international trade, export promotion, small business and economic development, to Washington to try to impact the initiative.

She didn’t comment on the diplomatic mission, but her office said that they made “progress” and several senators are going to review the specific clause in the EV incentive reform.

Separately, Bloomberg reported that Senator Ben Cardin (D-MD) confirmed that the union clause will be discussed as part of a review this week:

A package of tax credits including a proposal by Democrats to offer an additional $4,500 in tax credits to the buyers of electric vehicles manufactured by American plants that are unionized will undergo a review by the Senate Parliamentarian this week, Sen. Ben Cardin said in an interview.

Both Canada and Mexico have stated that they believe the extra incentive for electric vehicles built by union workers at US factories violates the renegotiated NAFTA trade agreement, which is now called the United States-Mexico-Canada Agreement, or the USMCA.

Tesla CEO Elon Musk has also voiced his opposition to the new EV tax credit. At first, he expressed that the union clause was purposefully leaving Tesla out of the maximum incentive possible since the automaker’s workforce in the US is not unionized.

More recently, the CEO opined that the whole Build Back Better act should be dropped because he feels it will cause a significant increase in the federal deficit.