By on August 13, 2021

Despite regulatory efforts often being praised as essential for elevating standards and promoting safety, they’re also an excellent way to funnel money and favors between political and corporate entities in plain sight. This dichotomy is particularly glaring in regard to environmental restrictions, which frequently favor businesses that are wealthy enough to afford to adhere to them and subsidies that effectively reroute tax funding to support various industries.

Considering this, it’s fairly rare to see bigger businesses griping about government assistance. But that’s exactly what Honda is doing with a proposal in Congress seeking to provide additional EV subsidies to consumers that buy vehicles manufactured by union-backed plants. The manufacturer has stated it believes the Clean Energy for America Act is discriminatory by favoring specific automakers and will ultimately restrict the choices available to consumers – which is true. 

The Biden administration has repeatedly backed legislation providing extra funding for electrification and doesn’t seem shy about spending government funds to ensure EVs gradually become the dominant mode of transportation. For example, the $1 trillion infrastructure bill your author was bemoaning last week passed on Tuesday and sets aside billions for the technology industry while making numerous provisions to regulate everything from how you start your car to establishing new per-mile driving taxations.

But allowing car buyers to receive as much as $12,500 back in taxes if they buy from a unionized factory seems overtly political. Most of us have never seen the UAW back a right-wing candidate in our lifetime. While that’s certainly the organization’s prerogative, having a Democrat-controlled government allocating a bunch of money for companies and organizations that will perpetually support it has ruffled feathers across the aisle. Though Honda’s complaint can basically be boiled down into it realizing that it doesn’t have a glut of union-backed facilities and therefore no way of prospering from the Clean Energy for America Act at the same level as General Motors or Ford Motor Co.

“Our production associates in Alabama, Georgia, Indiana and Ohio deserve fair treatment from Congress and should not be penalized for their choice of a workplace,” Jennifer Thomas, Honda’s vice president and business unit leader of corporate affairs, said in a prepared statement.

“By providing fair and equitable treatment for all American auto workers who build EVs and by equally valuing their contributions, we can accelerate our shared environmental goal of achieving widespread EV deployment.”

But that only makes sense if you’re operating under the assumption that the main point of this was universally promoting electrification or even prioritizing domestic manufacturers. Up until 2021, Tesla was only ever profitable thanks to its ability to sell carbon credits to rivals. Even then, its sales have been propped up by federal EV tax credits for years. However, its non-union (debatably anti-union) preference makes it ineligible for government support under the Clean Energy for America Act, despite it being the only established domestic manufacturer wholly devoted to battery electric vehicles.

Advanced by the Senate Finance Committee in May, the plan is loaded with tax incentives for green tech and attempts to nullify those allocated to the fossil fuel sector. But the union credits are the work of  Senator Debbie Stabenow (D-MI) who has been a longtime supporter of the U.S. automotive industry and UAW.

Joe Biden has also repeatedly stated that the White House was interested in working with Congress to create “good paying, union jobs” rather than simply “jobs.” The president reiterated this at the start of the month while discussing how the United States will need to ensure that half of all new vehicles produce no exhaust gasses by 2030.

“That means purchasing incentives for consumers to buy clean vehicles, union-made right here in America, like the ones championed by Debbie Stabenow and Ron Wyden in the Senate, which provides $7,500 basic credit, $2,500 credit for vehicles made in America, and an additional $2,500 credit for union-made vehicles,” Biden said. “That means spurring demand by converting the federal government’s enormous fleet of vehicles — we have over 600,000 vehi- — a lot of vehicles — 600,000, I should say — into an all American-made clean vehicles.”

While your author doesn’t have any qualms with facilities unionizing, enforcing policies that heavily incentivize businesses to embrace one of the largest unions in the country seems counter to the stated objective of promoting electrification in America. I would likewise argue that all of this is wildly anticompetitive and counter to every free-market principle I’m familiar with. But it doesn’t truly prioritize the primary goal of spurring EV adoption when Tesla has been taken out of the mix. Meanwhile, the UAW has a long history of corruption that bleeds over into the automotive industry and required this outlet to spend several years tracking one of the biggest federal cases in memory.

We seem to be looking at the other side of a familiar coin. The previous conservative government did what it could to assist automakers by rolling back rigid fueling regulations imposed by the Obama administration and undoubtedly hoped to make some inroads with the industry in the process. Trump went into office cheering deregulation in general, claiming that it would help both big and small businesses alike. These new EV subsidies seem to be operating in a similar manner but ultimately result in piles of federal funding being poured atop some of the wealthiest and most politically influential businesses currently operating. Honda is simply getting less of that money, along with Nissan, Tesla, Toyota, and anyone else lacking a strong union presence in the United States.

Honda isn’t the only one crying foul, either. Volkswagen Group has similarly expressed concerns about regulatory policies that favor specific automakers. Though we expect it would feel differently if it were benefiting in ways in which its rivals could not. Big H even entered into the voluntary agreement with the state of California (along with Honda, BMW, Ford, Volkswagen, and Volvo) to adhere to stringent emissions quotas and cited that as part of its grievances.

From Honda:

When we entered into that agreement with California, we knew it was a bit of a risk, but for Honda, it was the right thing to do for the environment and also for our customers in all [sic] 50 states – not just those living in California and the other states that have adopted its standards.  So, the Administration’s action in getting back on the pathway to strong federal fuel economy and GHG emissions standards represents an important milestone.

Honda already holds the distinction of being America’s most fuel-efficient, low-emissions full-line automaker, according to the January 2021 U.S. EPA Automotive Trends Report. That means our existing vehicle fleet has the lowest CO2 emissions of any full-line automaker. But the future direction of environmental requirements is not low CO2 emissions, it’s zero CO2 emissions.

Honda has made the same claims to carbon neutrality as most other automotive firms. But it’s not selling that many EVs, which have become the focus for legislators. This includes those opposing widespread subsidies, many of whom are upset with the amount of federal money that went toward supporting the purchase of vehicles boasting lofty price tags. On Wednesday, the Senate passed a nonbinding amendment to the $3.5 trillion budget resolution (which sets aside billions for EVs) that would prohibit individuals making over $100,000 per year from claiming EV tax credits. It also seeks to make vehicles costing in excess of $40,000 ineligible. Proposed by Republican Sen. Deb Fischer of Nebraska, the amendment passed by a narrow margin with only three Democrats offering support while just one Republican voted against it.

While it’s good to see someone attempting to wrangle the unfettered government spending, this fails to address the union aspect that has some automakers up in arms and ultimately results in billions of dollars going toward some of the largest and most profitable corporations on the planet. It often seems like lawmakers are either unwittingly funneling money to these businesses or doing so intentionally in the only manner that could be deemed legal. Though I couldn’t say which scenario is more disheartening.

[Image: Marketa1982/Shutterstock]

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39 Comments on “Correct: Honda Says Senate Tying EV Subsidies to Unions Discriminatory...”


  • avatar
    Master Baiter

    Democrats doing what they do best–purchasing votes with other people’s money.

    • 0 avatar

      Meh– Republicans do the same thing, just different people. In my experience, most Dems/Reps can agree with the sentence, “Why should I have to work so hard and pay so many taxes when that a**hole has it easy and pays nothing!?”

      The primary difference being that Dems thing “that a**hole” is a millionaire CEO paying single-digit percentages of their income (if that!) in taxes while Reps seem to think “that a**hole” is an impoverished inner city dweller. Both of them kind of have a point, but as long they’re fighting each other and not unionizing for better wages the standard of living can keep slipping while executive salaries keep climbing, you know?

      • 0 avatar
        tomLU86

        FYI Mr. Borras, polls show Biden and the Dems vastly outpolled the GOP…. in affluent zip codes.

        In middle America, well, Mr. Covid helped, both by hurting the economy, and by enabling epic, mass absentee “voting”.

        The Republicrats are bad news, for sure. But whereas Trump and GOP do a little for people who both work AND pay taxes, the Democrats do NOTHING for people who work and pay taxes.

      • 0 avatar
        Lou_BC

        I have to agree with Mr. Borras. This isn’t confined to one party.

        Honda and Toyota could unionize. They would not need to join the UAW.

        Republicans have traditionally bent over backwards to limit union bargaining power. This is an obvious shift in favour of unions.

        • 0 avatar
          tomLU86

          Watching the Republicrats is like watching professional wrestling. It’s staged for the masses.

          Since the wealthy control both parties, you can rest assured they will continue to get breaks that enable them to multiply their wealth that middle America does not.

          What do you think the effective tax rate is on CEOs making $25-50 million a year? It’s a lot less than a family making $100-$200k a year.

          Do you really think America will be better off with the frenzy at our border, where illegals are being bussed and flown all over the country? Thank you, Democratic party.

          Do you think the US is better off with a more relaxed view toward crime?

          I would add reckless spending, but Republicans do that too. It’s just that Democrats do more of it. A LOT more.

          As for the unions, that’s a complex issue. I certainly concede the UAW, and United Steelworkers, DID (not is doing, but DID) a lot to improve the lot of autoworkers, and this had a “rising tide lifts all boats” effects on American labor.

          But that was during the 1940s and 1950s, maybe 1960s.

          Today the UAW is it’s own business. Maybe you missed the articles, some in this space, about the recent spate of convictions and how the people in the UAW hierarchy skimmed money for the greater good–THEIR greater good. Perhaps you’ve never dealt with the inane work rules in UAW plants.

          When GM ruled, Ford and Chrysler followed, and the competition (Japan and Germany) were still clearing the rubble, the union could extract outsize benefits.

          Now they cannot. And the transplants, as I understand, do not play slave wages, do they?

          In fact, the Asians and Germans have invested in the US, creating jobs for working people (of course, the profits go to Japan and Germany, where the brains are).

          The Detroit Three–BIG investors in Mexico. And China. And they would be, union or not.

          So, for Biden to add the union requirement is ridiculous. Of course, the whole EV thing is ridiculous–but that is another issue.

          • 0 avatar
            SoCalMikester

            there are unions in germany and japan. i wonder if their wage is comparable. the “drown the govt in a bathtub” crowd created several new agencies under their watch. money is just a construct

        • 0 avatar
          SoCalMikester

          unions have been screwed over since PATCO. finally tossing the uaw a bone. walmart and amazon could use a UFCW contract, for sure.

          • 0 avatar
            Lou_BC

            @SoCalMikester

            https://www.forbes.com/sites/haydnshaughnessy/2012/05/06/revisiting-how-germany-builds-twice-as-many-cars-as-the-u-s-while-paying-its-workers-twice-as-much/?sh=29893b267806

            “Frederick Allen wrote an excellent and extremely popular post here on Forbes back in December that asked how German auto companies can pay twice the wages that are paid in the USA and still be more successful. The basic proposition was this: the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. Yet Germany’s big three car companies—BMW, Daimler (Mercedes-Benz), and Volkswagen—are very profitable.”

            Part of the article does question the validity of that statement.

            Flies in the face of those who believe that unions are what kill car companies.

    • 0 avatar
      tomLU86

      Not just the Democrats.

      GM, and to a lesser extent, Ford and “Stellastits” are happy about this.

      GM is pushing for electric and autonomous.

      GM’s history, and hubris, is kind of unfortunate. From the Depression thru the end of the 1960s, GM was the epitome of well-run enterprise: making a LOT of money by making and selling good products RIGHT FOR THE TIMES, which made a lot of money.

      Unfortunately, as the times changed, GM was unable to continue the winning cycle above.

      Since 1973, GM has had several good “less than big” vehicles–and many more, NOT so good “less than large size” vehicles.

      The days of the large vehicle are numbered–not because of the ill-conceived electric car hysteria, of the hysteria about climate change, but because as oil gets dearer, fewer people will pony up for big trucks and SUVs.

      So, when you can’t win with you do well, change the rules! It’s as if the Detroit Lions got a great kicker! They can’t run or pass, but if they lobby the NFL to make field goals worth 6 points, and make a first down 20 yards, vs 10, well, that will help them against teams that can run and pass.

      So GM want “all electric” for it’s own “big reset”–to rewrite the rules and try to take the wind out of Toyota and other Asians.

      And Ford and Stellastits are in the same boat, pretty much. Take away trucks, they are all done. So, maybe a reset is a good idea…

  • avatar
    SCE to AUX

    “good paying, union jobs” rather than simply “jobs.”

    To Mr Biden: If the jobs at the transplants were uncompetitive, their workers would go elsewhere, and before that, the mfrs would have trouble hiring.

    Those plants are also subject to OSHA requirements, so union representation won’t necessarily make these workers more safe or more wealthy, especially after their dues are paid to (corrupt) union officials.

    • 0 avatar
      Luke42

      “If the jobs at the transplants were uncompetitive, their workers would go elsewhere, and before that, the mfrs would have trouble hiring.”

      What you say is definitely true in large cities with competitive labor markets, but that isn’t true everywhere. I used to believe this was a universal truth of living in a Capitalist society but, alas, the reality is far more complex.

      As someone deeply familiar with Appalachian poverty, I’d like to introduce the concept of a “company town” into this discussion:
      https://en.wikipedia.org/wiki/Company_town

      These are towns where one employer basically has monopoly power when it comes to purchasing labor from the residents. In the Bad Old Days, these companies often had a lot of influence over the prices they pay in stores, as well — though that’s less common today.

      Economic abuse in company towns were rampant — leading to songs like “Sixteen Tons” where he “sold my soul to the company store”. Stories about this sort of thing (up to and including the Battle of Blair Mountain) are common in rural West Virginia where I spent a lot of time in my 20s.

      What this really comes down to is the relative power in the labor market of the workers and employers. How well you can change jobs when you’re mistreated at work just comes down to who has the power in that particular place.

      In rural areas, it’s common for there to be only 1-2 large labor buyers, and they essentially have monopoly power that they can use to unilaterally depress wages.

      In other markets, employees can just switch jobs when bad stuff happens. This is one of the privileges of living in a big tech hub, like The Bay Area or Austin — despite the pretty obvious and massive drawbacks.

      People living in rural coal mining towns aren’t so privileged, because their employers have more power and they have less power. Simply dismissing the issue by saying they can get a better job doesn’t change the balance of power at all, or decrease the costs of moving or learning a new job. As such, these become one-way towns where the kids of the residents leave and never come back — because they don’t have the switching costs that their parents face.

      I wish it were as simple as “get a different job”, and that works for people in cities with competitive employment/labor markets. But it’s not a universal solution, unfortunately — most people solve it by letting their kids leave for a better life in the city.

      There are ways to fix this, but it involves direct government investment in rural communities — which runs contrary to the political beliefs of the people in those communities. As a result, the lack of economic fluidity and opportunity in Rural American won’t be fixed any time soon.

      • 0 avatar
        Daniel J

        Is this true for Honda though?

        Maryville/East Liberty is right next to Columbus, OH
        Lincoln is right next to Birmingham, AL
        Greensburg isn’t far from either Cincinatti or Indianopolis
        Greensboro, NC is a fair sized city in the triad of Greensoboro, Highpoint, and Winston-Salem.
        Swepsonville is right next to Burlington, NC

        The only plant I see that Honda has that describes what you are talking about is Timmonsville, SC which builds ATVS.

        So I don’t think Honda is somehow extorting small towns for cheap labor.

        No one talks about though that even where there are plants and facilities in small rural towns, they can pay less because the cost of housing is usually low.

        Even in southern cities where Honda has plants, the cost of living is usually lower than the northern counterparts. Why would a company put a plant in, say Maryland, where there is 20 percent state and local income taxes and would cost a company twice as much for the same work that could be done in say, South Carolina? It costs the company more to be in Maryland, with the Employee in roughly the same outcome.

        Let’s even say for a minute that the plants in the south were unionized. Eventually the cost of living would rise to the level of pay.

        I generally don’t think that politicians really care about the rural worker. I think all they care about is making a large extortionist racket happy.

  • avatar
    Master Baiter

    “Meh– Republicans do the same thing, just different people.”

    Baloney. There’s a big difference between letting earners keep more of their money vs. gifting money to people who either don’t work, or belong to what is effectively a legal cartel on labor that extracts above-market wages from people stupid enough to purchase Detroit iron.

    What both parties ARE complicit in is transferring the manufacturing base to China, which has lifted millions of Chinese out of abject poverty. Is that better or worse for Joe Six Pack who’s eyeing a new bass boat? Well, his job pays less, but the bass boat now comes from China and costs 1/3 of what it would otherwise.

    • 0 avatar
      SCE to AUX

      Good summary.

      Nobody wants to pay more for stuff, but then we cry about jobs going overseas.

      But on this topic: subsidizing union labor is extremely discriminatory, but that precedent has already been set by D-run cities who require unionized contractors to do perform construction work, etc.

      I doubt this would even be an issue if Tesla wasn’t dusting the Big 2 in the EV market. Biden is embarrassed by the optics.

    • 0 avatar
      thegamper

      “Baloney. There’s a big difference between letting earners keep more of their money vs. gifting money to people who either don’t work, or belong to what is effectively a legal cartel on labor that extracts above-market wages”

      That is a gross oversimplification and distortion of reality. The republicans are just as bad with corporate welfare. Keep in mind that wage earners have no choice but to pay taxes. Sure the can get deductions, but it’s nothing compared to the insane amount of loopholes and write-offs that allow people like Jeff Bezos, Donald trump pay zero taxes in perpetuity. Nothing compared to all the business favorable laws that let insanely profitable companies like Apple pay a zero tax rate. Each party has giveaways for their constituents. Personally, I like the ones that allow people to escape poverty better than those that allow business owners to escape paying their fair share so they can buy another vacation home, add to their supercar stable, etc. Just saying.

      More on point, no love for unions here, and I would have no problem losing a $2500 tax credit to get the vehicle I want. So not all that concerned. It is BS union pandering at it’s worst though.

      • 0 avatar
        Master Baiter

        “…companies like Apple pay a zero tax rate.”

        Apple paid $9.7 billion in income taxes in 2020.

        You really need to think about where you are getting your information and perhaps find better sources.

        • 0 avatar
          thegamper

          My mistake, it must be the hundreds of stories in print, online, on television, etc about Apple’s tax avoidance year after year that gave me that impression. Apple is truly the picture of corporate responsibility….thanks for setting the record straight.
          Thank goodness they aren’t one of those companies using offshore accounts/laws to avoid taxes in the US or running sweatshops or using child labor or something.

    • 0 avatar
      thegamper

      And just to be clear, whether is democrat giveaways to the poor and immigrants or republican giveaways to the rich and corporate America, it’s always the middle class that gets squeezed and ends up footing the bill. My family has been ineligible for ALL of the coronavirus stimulus doled out to individuals and I am not a business owner that got free PPP money. I fall squarely in the the class that just gets to keep paying for it all. That’s what’s wrong on both sides of the isle.

      • 0 avatar
        Luke42

        @thegamper:
        “My family has been ineligible for ALL of the coronavirus stimulus doled out to individuals and I am not a business owner that got free PPP money. I fall squarely in the the class that just gets to keep paying for it all.”

        Are you sure you’re middle class?

        We received some of the COVID aid, but my wife and I have been doing quite well during the COVID economy.

        He’s a breakdown of the numbers:
        https://en.m.wikipedia.org/wiki/Household_income_in_the_United_States

        This article puts the 2019 median household income at $63k/year. (They use median, because a few super-high earners throw off the average.). This is distinct from the median personal income, which is about $36k/year.

        With a median household income of $67k/year, that means that half of all households make less than $67k/year.

        If you make more than that, you need to realize where that puts you in American society.

        I’m probably the same kind of “middle class” you are. It feels like we’re just getting by, even if we’re making substantially more than the median income — because we have no safety net, so we need a lot of money to gain basic economic security. If we’re just getting by, then how is everyone else doing?!

  • avatar
    slavuta

    “[Honda] believes the Clean Energy for America Act is discriminatory”

    Now they are woke. America in a shortest period became a discrimination nation

  • avatar
    Garrett

    What up to $12,500 back means that there will be that much extra baked into the final transaction price between the manufacturer and the dealer.

  • avatar
    gregtwelve

    “But that’s exactly what’s Honda is doing”

    That is only one of many grammatical errors contained in this article and I find the entire piece unprofessionally written. Do editors proof read these?

    • 0 avatar
      Tim Healey

      Yes, we proofread. But we’re human. We don’t catch every error, since that is impossible. This one slipped through the net. Will fix, thanks.

      • 0 avatar
        C5 is Alive

        Greg, that’s Healeyese for “no, not well.”

        You know how you catch every mistake in every article, or at the very least a whole helluva lot more than you manage now? Make an effort to catch all the errors in just one and build from there. Others somehow manage this seemingly impossible feat…

  • avatar
    SoCalMikester

    $2500 back to the purchaser might not be enough to make a difference because honda puts out a good product. its STILL $10,000 off an electric honda

  • avatar
    gregtwelve

    I appreciate the response and your acceptance of my critique. I realize that the number and frequency of your articles far exceeds any other auto site that I visit and I know that is not an easy task. In fact I have a hard time composing a comprehensible comment. I apologize if anyone took offense and I appreciate the fact that every time I visit TTAC there are 2 or 3 additional posts which I generally enjoy reading.
    I would like to add that Matt is a good writer and appreciate his more cogent points but proofreading is important.

  • avatar
    Kendahl

    The UAW supports the Democratic Party. In return, the Democratic Party supports the UAW. Nothing new here. Neither cares about providing the best cars at the lowest prices to consumers.

  • avatar

    I disagree with Honda. Unionized companies are less productive and less profitable. They need financial help more than companies like Honda and Toyota. Honda and Toyota can survive without subsidies, GM and Ford – not.

  • avatar
    3800FAN

    Honda is 100% correct and they, along with toyota nissan subaru tesla bmw vw mercedes hyundai and kia will sue on those grounds and win.
    And Dont worry Honda. Im sticking with you cuz every uaw built car Ive owned has been garbage while my Hondas have been great. Im not gonna get burned again.

    And what about big 3 cars built in mexico and canada?

  • avatar
    driveabeater

    If folks want to unionize that’s fine. I don’t care one way or the other.

    That being said, closed shop states, or states that require workers to pay a fee in order to abstain from union membership, were rendered unconstitutional by NAACP vs Alabama 1958.

    The case clearly established Freedom of Association. It is impossible to have Freedom of Association without also having Freedom of Disassociation.

  • avatar
    probert

    Yes unions tend to vote democrat because the GOP is anti-union. Funny how that works. Not everyone is like gop voters who consistently vote against their self interests and are currently fueling ” COVID 3 – this time its MAGA!!!!”

    Nice to see a big player in the EV market sticking up for itself though, OH wait – which EVs do Honda sell?

    Maybe Honda etc, will enter Union agreements, maybe wages will go up, maybe the south will emerge from 3rd world status. Only time will tell!!!!!!!!!

    Oh and “DEMS spend too much?” Look at deficits and note when they blossom, look who was in power, ponder “WHERE DID THE MONEY GO!!!!!!!!!” and then read about the mega-yacht industry. LO effing L.

    • 0 avatar
      C5 is Alive

      Even despite recent problems, the GOP still tends to appeal to the successful and those who believe in working hard to become successful. The Dems… less so, suffice it so say.

      There’s another word besides “democrat” or “leftist” for those who believe they’re entitled to take more from society, and its productive elements, than what they produce for it. That word is vermin.

  • avatar
    28-Cars-Later

    Biden Admin announces plans to create charging network in Kabul, Afghanistan.

    Oh wait…

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