Source: Blog – Alliance for American Manufacturing

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The EV shift must include American jobs, and union bargaining wins will likely maintain more of them. But federal rulemaking has a part to play too.

The United Auto Workers wrapped up a six-week strike of the Big Three automakers last week, and though not all the details are public it sounds like they did well: Better 401Ks, better wages, and in some cases no wage tiers.

One of the results that really catches the eye, though, was Stellantis’ agreement to reopen an assembly plant in Illinois it had idled in February. “As recently as 2019,” reported the American Prospect, “the plant employed 5,464 workers on three shifts building the Jeep Cherokee.”

Now it’ll be making a mid-sized truck, as well as an electric battery assembly line.

There’s a lot to be said about how remarkable it is that there’s an agreement to reopen a specific plant – but the fact they’re including in it the production of electric vehicle batteries is remarkable too. Indeed, the union made the automakers’ plans for EV production a priority, and it paid off. GM agreed to not oppose the question of unionization at its battery plants, and the UAW made gains at Ford as well. This, as well as the right to strike over future plant closures, are part of the union’s effort to secure a just transition as the industry shifts from combustion engines to electric ones.

That concept – a just transition – is not a new one. It’s got its own Wikipedia page. There are United Nations reports on the topic. It’s a worldwide question, as there are workers everywhere worried about what the advent of a low carbon economy will mean for high carbon industries.

AAM has argued for years that we can achieve some of the goals of a just transition, specifically in auto manufacturing, by tying consumer incentives for them to domestic production requirements. It’s the argument we made when California updated the rules for its wildly popular EV consumer rebate.

It’s among the reasons we like the federal consumer tax credits for domestically made EVs that have passed Congress and have been signed in to law by President Biden since then.

It’s also the reason we’ll be watching how the U.S. Treasury Department interpret rules it must implement that will govern which EV batteries – the major component to an EV – will qualify for that full $7,500 credit.

Make them too strict, the logic goes, and it’ll take longer to get American drivers into EVs, even as accelerating the country’s switch is a Biden administration political priority.

Make them too lenient and get hammered for letting Chinese companies benefit from these consumer tax credits too. China dominates the EV battery supply chain, battery materials it produces show up in EV batteries everywhere, and the whole point of these credits is to help homegrown industry establish itself. U.S. Sen. Joe Manchin (D-WV), who was key to the passage of the bill that made these tax credits a reality, the Inflation Reduction Act, has threatened to sue Treasury if it doesn’t tighten rulemaking up. Republican White House candidates – specifically the loudest one – have railed against the entire program as a giveaway to the Chinese.  

That makes Treasury’s a fraught decision. Making these calls certainly won’t be easy, sure, but those making them should remember: Centering domestic production and American workers is what makes all of this work for voters. It’s why these industrial policy bills passed. Our rulemaking should probably reflect that.

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