German carmakers condemn Biden’s electric-vehicle subsidy plans

German carmakers have criticised US president Joe Biden’s plans to offer bigger subsidies to buyers of American electric vehicles from unionised manufacturers than to those purchasing imported models or those made by non-unionised workers.

As part of the White House’s Build Back Better bill, which is awaiting Senate approval, new battery-powered and hybrid cars in the US will attract up to $12,500 each in tax credits.

Of that maximum, $4,500 will be available only to those buying a car made in the US by a manufacturer with a unionised workforce. A further $500 of the full subsidy applies only to cars with a US-made battery.

“The market economy works best when you have clear and [the] same rules for all market participants, a level playing field,” Ola Kallenius, chief executive of Daimler, told the Financial Times.

German electric-vehicle subsidies are available to all buyers regardless of where the cars are made. Kallenius urged the US to follow suit and “let the market decide”.

The German car lobby, the VDA, has also criticised the plans.

“Unilaterally designed funding criteria contradict transatlantic co-operation, which we would do better to intensify rather than slow down,” said VDA president Hildegard Müller. “We now need joint co-ordinated efforts to achieve climate goals. New trade conflicts must be avoided.”

German manufacturers produced more than 742,000 cars in the US last year, according to the VDA, and employed more than 60,000 people. Volkswagen’s Audi and VW brands are among the top sellers of plug-in hybrid and pure electric cars in the country, as is BMW.

However, Audi does not have a US plant, while neither VW and BMW’s factories nor Daimler’s Mercedes-Benz plants are unionised.

“I want to remind everybody that [at] Mercedes-Benz and Daimler Truck we employ 22,000 in the United States,” said Kallenius, “and if you look at all the suppliers that work with us, its tens of thousands of other jobs that are linked to all of those, so we are very much an American company as well”.

Toyota, whose US workforce is also not unionised, has criticised the bill, arguing that the legislation “says having more electric vehicles on the road is secondary to promoting unionisation”.

The Japanese company has taken out ads urging people to lobby their representatives in Washington on the issue, arguing that US consumers should not have to “pay an extra $4,500 to buy an electric vehicle not made by Ford, GM or Chrysler”.

Two dozen ambassadors from countries with large auto industries wrote to US legislators in October objecting to the provisions, while the European Commission appealed to senators to reconsider proposals that would result in “unjustified discrimination against EU car and car component manufacturers”.

Electric models made by several US carmakers, such as Ford, are also excluded from the full subsidy because they assemble some of their cars in Mexico.