The Biden administration is offering automakers and their suppliers $12 billion in grants and loans to convert their auto plants to making electric vehicles to satisfy labor unions.
Energy Secretary Jennifer Granholm announced on Aug. 31 that the administration wants to accelerate the industry’s transition to non-gas-powered vehicles.The White House hopes these grants and subsidies to fund the conversion of existing plants to build EVs, will ease harsh criticism from automakers and the United Auto Workers (UAW) in recent months.
President Joe Biden has been pushing proposed environmental rules aimed at forcing Americans to give up internal combustion vehicles.
Energy Department to Grant Money to Encourage EV Investment
At least $10 billion of the grant money will come from the Energy Department’s Loan Program Office, which received additional funding from the recent climate, tax and health care bill, according to a press release.Another $2 billion will come from the Inflation Reduction Act—passed last summer.
The Energy Department is also offering an additional $3.5 billion for domestic battery production through the 2022 infrastructure bill.
“While we transition to EVs, we want to ensure that workers can transition in place, that there is no worker, no community left behind,” Ms. Granholm told reporters in a call.
Biden Administration Wants Gas-Powered Vehicles Gone By Mid-Century
The Biden administration wants to eventually eliminate gas-powered vehicle use in the United States as part of its effort to combat climate change.Democrats want plug-in electric, hybrid, or hydrogen fuel cell vehicles to be the legal standard by the middle of the century by enticing the industry with additional subsidies, tax credits, and strict regulations.
The Environmental Protection Agency proposed a plan in April to make sure that two-thirds of new vehicle sales would be electric by 2032.
For medium-duty vehicles, the agency wants 46 percent of them to be electric powered by the deadline.
The administration is also proposing new climate regulations for heavy-duty vehicles including, delivery trucks and school buses.
The EPA does not plan to mandate those levels, but it plans to require automakers to limit so-called greenhouse gases by making more of their vehicles electric or by upgrading the gas-powered engines in their vehicles.
“This is a win for the American people,” White House Climate Adviser Ali Zaidi told reporters in April, adding, “President Biden is seizing the moment.”
Both automobile industry trade groups and Republicans are critical of the measure.
“Are EPA’s new standards feasible? Will they accelerate the EV transformation? It depends,” said John Bozzella. President and CEO of the Alliance for Automotive Innovation, in his blog.
“Factors outside the vehicle, like charging infrastructure, supply chains, grid resiliency, the availability of low carbon fuels and critical minerals will determine whether EPA standards at these levels are achievable,” he added.
In addition to being skeptical of green energy policies, Republicans have argued that the proposal would limit consumer choice and that electric cars are too expensive for the average American driver.
Labor Unions in Conflict With White House Over Green Policies
The UAW has been harshly critical of the White House’s $9.2 billion loan to the industry to build electric car battery plants in the United States.
Labor leaders are concerned that the transition to clean energy will allow automakers to use the transition to cut wages and demanded that the Biden administration take action to prevent that.President Trump criticized President Biden’s electric vehicle policy in late July at a speech in Michigan.
“It’s going to decimate your jobs, and it’s going to decimate more than anybody else the state of Michigan,” he said.
The union has yet to endorse President Biden for reelection, citing his electric vehicle policies and has warned that the rapid push toward electric could put thousands of jobs at risk in crucial states such as Michigan, Ohio, Illinois and Indiana before the 2024 election.
UAW President Shawn Fain called the loan a massive “giveaway” with “no consideration for wages, working conditions, union rights or retirement security” that would help create low-paying jobs, adding, “Why is Joe Biden’s administration facilitating this corporate greed with taxpayer money?”
UAW members overwhelmingly voted on Aug. 25 to authorize a strike at the Big Three Detroit automakers if an agreement over wages and pension plans was not reached before the current four-year contract expired on Sept. 14.
President Biden has promised that “building a clean energy economy can and should provide a win-win opportunity for auto companies and unionized workers who have anchored the American economy for decades.”Meanwhile, Fain is battling to keep a Jeep factory in Belvidere, Illinois, that Stellantis is planning to shutter.
Stellantis, which owns the plant, has left open the possibility that it could remain open if it was used to build a new product line with government aid.
Secretary Granholm told reporters that auto plants, which have been built up around local communities, are “prime for taking advantage of these funding opportunities.”
UAW in Favor of New White House Policy
In reaction, the Energy Department said that the $12 billion plan would prioritize good working conditions, including facilities that pay high wages and commit to retaining or expanding collective bargaining agreements.Still, Betony Jones, the Director of the Office of Energy Jobs, wrote there would be no specific labor requirements for companies to get the funding, but the union’s demands seem to be largely satisfied.
Ms. Jones did say that new EV projects with pro-labor conditions would have a greater chance of receiving additional funding.
The UAW president said the White House’s new policy “makes clear to employers that the EV transition must include strong union partnerships with the high pay and safety standards that generations of UAW members have fought for and won.”
Reuters contributed to this report.
