Under a previous proposal, the tax credits would have applied only to vehicles assembled in the United States. The policy change averts potential trade disputes and clears a hurdle in the path of Canada’s EV industry.
The legislation stemmed from a deal struck July 27 by two top Democratic negotiators, Senate Majority Leader Chuck Schumer of New York state and Sen. Joe Manchin, the conservative West Virginia Democrat who rejected President Joe Biden’s earlier drafts but surprised colleagues with a new one. The deal averted a “trade war,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association . The previous Biden proposal “illegally excluded Canada-made vehicles,” Volpe said.
A prior proposal by the Biden administration allowed unionized automakers to offer an additional $4,500 to EV buyers. The provision was opposed by Manchin amid strong blowback from companies such as Tesla and Toyota, which argued that provision would have given an unfair advantage to their Detroit-based rivals.While the current bill drops the union-built requirements, it adds provisions for battery materials and components.