Ford asks Congress for tax incentives to support electric vehicle development

Source: By Riley Beggin, The Detroit News • Posted: Wednesday, March 17, 2021

Washington — Leaders at Ford Motor Co. urged Congress Tuesday to increase tax incentives and other federal funding for electric vehicle technology.

Additional federal help will be critical as the U.S. auto industry faces ongoing competition with Europe and China for the future EV market, said Jonathan Jennings, vice president for Global Commodity Purchasing and Supplier Technical Assistance at Ford.

His comments came as part of a Senate Finance Committee hearing on how the U.S. tax code can be improved to aid American manufacturing. The other witnesses — including National Association of Manufacturers CEO Jay Timmons, MIT professor Michelle Hanlon, United Steelworkers District Director Donnie Blatt and Intel Corp. CFO George Davis — also urged low corporate taxes and incentives to discourage outsourcing.

The global shortage of semiconductor chips has sidelined production at auto plants around the country and illustrated the frailty of the supply chain, Jennings said. And competitors like China maintain dominance over crucial EV components such as lithium-ion batteries.

“In short, we must collectively do more to protect the future of manufacturing in America,” he told the Senate Finance Committee. “Together, public and private support of electrification will ensure America not only competes as a leader globally, but wins. This is particularly important as Europe and China are already moving forward with robust electric vehicle adoption strategies and policies.”

The testimony also comes as a United Auto Workers vice president is accusing the Dearborn automaker of shirking its commitment to add a new product to its Ohio Assembly Plant in Avon Lake, instead moving the electric vehicle to its Cuautitlan site in Mexico.

Asked by Sen. Sherrod Brown, D-Ohio, why the company decided “to turn its back on a community,” Jennings said the company is looking to “increase the capacity that that facility provides from a super duty truck perspective” and invest more in the plant, but “as we continue to look at other activities for other programs, we will be looking outside of Ohio.”

President Joe Biden has proposed increasing tax credits for companies creating manufacturing jobs in the U.S. and increasing federal incentives for research and development, both of which would be boons to American automakers, Jennings said.

But Biden also has proposed raising income taxes on people who make more than $400,000 per year and increasing capital gains, payroll and corporate income taxes. The Tax Foundation, a nonprofit tax research group, found his plan would raise around $3.3 trillion over the next decade but reduce U.S. GDP by around 1.62% in the long term.

Republicans on the committee repeatedly raised concerns about these tax increases, and Hanlon of MIT called the corporate income tax “the most harmful taxation for economic growth because it discourages job creation and investment.”

However, both Republican and Democratic members expressed interest in supporting research and development and incentives to bring highly-needed resources into the U.S.

“The U.S. is a global clean energy country that is in a race right now. We know $100 billion has been put in that race by China for electrification,” Michigan Sen. Debbie Stabenow, D-Lansing, said. But she added there are layoffs in Michigan right now because of the shortage of semiconductor chips, and a potential crunch on battery availability may be imminent.

“There’s no reason we can’t have those things made in America.”

Sales of electric vehicles have taken off in China and Europe while they remain less than 2% of sales in the U.S. And China is home to 73% of the world’s lithium ion battery manufacturing capacity and the U.S., in second place, has around 12% capacity, according to a 2019 analysis by Bloomberg.

“This is simply unacceptable,” Jennings said.

Last month, the U.S. International Trade Commission prohibited the majority of U.S. imports of batteries from Korean company SK Innovation for the next ten years for stealing trade secrets from rival LG Chem. The order will go into effect in mid-April unless Biden intervenes and reverses the decision.

Jennings told the committee that Ford will have to “look to foreign suppliers” to fulfill requirements by the United States-Mexico-Canada Agreement due to the decision because there isn’t adequate battery supply available in the U.S.

“That’s why we really feel it’s critical for us to have a more competitive position within the U.S. footprint,” he said. “What we’ve consistently stated is we encourage the Korean government to work with these two companies to resolve this before the 60-day USTR timeline. They need to come to an amicable agreement.”

rbeggin@detroitnews.com

Twitter: @rbeggin