A split among automakers over Republicans’ megabill is hobbling their powerful lobbying group from presenting a unified message as the Senate considers major rollbacks to electric vehicle and manufacturing tax credits benefiting the industry, according to four people familiar with the dynamics.
The Alliance for Automotive Innovation, which represents major automakers and suppliers, has not publicly taken a stance on the House-passed budget reconciliation bill — even as it guts incentives that its members were counting on receiving as they poured billions of dollars into electric vehicle and battery factories across the United States in recent years.
The trade group had strongly defended the credits in Democrats’ climate law last year, and in recent months warned that rolling them back would threaten U.S. competitiveness and national security, given China’s heavy investment in EV manufacturing.
But even as the Senate has moved quickly to take up the bill, the Alliance has yet to take a public stance because its members have failed to reach consensus on changes to a key tax credit claimed by automakers for producing EV batteries, according to the four people, who spoke on condition of anonymity to discuss sensitive internal dynamics.
The House-passed megabill would largely sunset the $7,500 consumer EV tax credit and a provision that allows leased EVs to qualify for the credit by the end of the year. It would also impose severe “foreign entity of concern” restrictions on the advanced manufacturing production credit, known as 45X, that companies in a range of industries have said will render the credit unusable.
While most automakers in the trade group are urging the Senate to loosen the 45X restrictions passed by the House, General Motors largely supports them because it believes its current supply chain is set up to comply, the people said.
A GM spokesperson told POLITICO in a statement that the “strengthened [foreign entity of concern] restrictions in the House bill validate the importance” of its efforts to shift manufacturing to the United States.
“GM has been investing in a resilient critical minerals and battery supply chain to support American innovation, manufacturing and economic security,” the spokesperson said. GM’s position on the House language has not previously been reported.
Automakers, especially the Detroit Three and their international competitors, have long diverged on some policy issues, making it difficult for the industry to present a united front. The Alliance, which was formed in 2020 out of a merger of two auto trade groups, has nearly four dozen members including battery manufacturers and suppliers.
But in this case, GM is the outlier, according to three of the people. Other automakers have publicly said the new restrictions on the manufacturing credit go too far.
At a conference last week, Ford Motor Co. Executive Chair Bill Ford said the foreign entity of concern restrictions would “imperil” Ford’s under-construction battery plant in Marshall, Michigan, and the 1,700 jobs it is set to create.
Ford plans to use licensed Chinese technology for the advanced batteries it produces at the plant, which the automaker says is the only option to produce the batteries on U.S. soil as opposed to buying them from China.
But Republicans have long targeted the plant with legislation and investigations because of the licensing agreement with the Chinese company, Contemporary Amperex Technology Co. The House-passed reconciliation bill would bar companies that license Chinese technology from claiming the manufacturing credit.
Beyond Ford, a number of international automakers have called for changes to the foreign entity of concern rules.
Donald Davidson, head of federal affairs and political strategy at Volkswagen Group of America, said during a panel discussion at Benchmark’s Giga minerals conference Tuesday that the language is “so complex that I don’t know who, at the moment, could comply.”
Phillip Sherman, senior manager of international and industry affairs at Mercedes Benz, told the panel his company and other automakers would make an all-out effort to secure changes to the 45X language in the Senate. “We’re gonna leave it on the field,” he said.
That panel was hosted by Jennifer Safavian, the president and CEO of Autos Drive America, a separate trade group representing international automakers that sometimes diverges from the Alliance.
One of the people who is familiar with the lobbying efforts on the manufacturing credit said GM is “undermining the other automobile companies to try and gain a competitive advantage based upon their present supply chain.”
“The indictment of it all is by doing that, you might be helping GM in the short term, but what you’re really helping is the Chinese auto manufacturers [to gain] a foothold in the global auto marketplace and preventing U.S. companies from being able to compete on a level playing field with China,” the person said.
But Kurt Kelty, vice president of battery, propulsion and sustainability at GM, told the Benchmark conference Tuesday that the automaker has already become the largest producer of battery cells in North America and plans to invest even further.
“Overall, the North American content of our battery supply chain will increase eightfold between now and 2028,” Kelty said. “We’re building not just better batteries, but a stronger, more resilient U.S. industry for the future.”
A spokesperson for the Alliance said in a statement the organization has been engaged with both chambers of Congress on the megabill, including on credits for consumer EVs, leased EVs and manufacturing.
“What we’ve communicated to the House (and now the Senate) during the process to date is this: The overwhelming majority of our members support the extension of 30D, 45W and 45X because of their importance to the health and competitiveness of the auto industry in America,” the Alliance spokesperson said.
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