Canadian-made electric vehicles will qualify for tax credits under revised U.S. bill
Electric vehicles made in Canada will be eligible for expanded tax credits in the United States, a move that is welcomed by the Canadian government and the auto industry.
The new legislative deal reached between U.S. Senator Joe Manchin and Senate Majority Leader Chuck Schumer would expand consumer tax credits for electric vehicles and apply to those built in North America. The original bill, a key part of President Joe Biden’s climate agenda, limited credits to vehicles produced by unionized automakers in the United States, and clashed with Canadian governments and auto industry officials , as well as automakers such as Tesla and Toyota.
“This is good news for Canadian workers, jobs and our manufacturing industry,” Canadian International Trade Minister Mary Ng said in a statement Thursday.
“Since the Prime Minister’s first meeting with President Biden last year, we have repeatedly emphasized that the original proposal would be harmful to both Canada and the United States, so we are pleased to see this recognized in the new version of the bill.”
The new legislation, which has yet to be enacted, includes spending $369 billion on energy security and climate change initiatives. Under the bill, automakers will be able to offer $7,500 in tax credits for the purchase of new electric vehicles and $4,000 in tax credits for the purchase of a used electric vehicle.
In a statement, Canada’s Ambassador to the United States, Kristen Hillman, said Canada had been “relentless” in its efforts to convince Congress and the White House to abandon a plan “that discriminates against Canada and breaks the very successful integration of our automotive sector”.
Ontario Economic Development Minister Vic Fedeli said in an interview that the policy reversal shows how effective lobbying efforts have been over the past year. Fedeli and Premier Doug Ford traveled to Washington in March to meet with officials and business leaders, as well as to discuss proposed electric vehicle policy.
“We reminded them of the critical importance of the trade relationship and how it supports millions of jobs on both sides of the border,” Fedeli said.
“What’s in this bill is what we think is needed, to have a ‘Buy North American’ lens on everything they do.”
The previous version of the legislation would have hurt American automakers and parts suppliers, said Flavio Volpe, president of the Association of Automotive Parts Manufacturers. He says a Canadian manufacturing plant that produces $10 billion worth of vehicles a year depends on about $4 billion to $5 billion worth of parts and raw materials on the American side. US manufacturing plants also rely on parts from Canadian suppliers.
“It would have been impossible to thread the needle on this and not affect Ford, General Motors and Stellantis,” Volpe said.
“When the United States targets Canadian industrial capacity, particularly in the production of electric vehicles, lawmakers handicap their own country’s ability to compete with China.”
The expansion of electric vehicle credits comes as automakers around the world continue to invest heavily in the production of battery electric and hybrid vehicles. This year in Canada, automakers like Stellantis, General Motors, Honda Canada and Ford have announced they will spend billions of dollars to upgrade existing manufacturing facilities and build new ones to help produce electric vehicles.
With files from The Canadian Press
Alicja Siekierska is a Senior Reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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