Tesla (TSLA) CEO Criticizes Electric Vehicle Bill

Musk derides bill's incentives for unionized factories

A bill establishing electric vehicle (EV) purchase credits that provides incentives for unionized factories has riled car manufacturers. The company most incensed by it is electric vehicle (EV) pioneer Tesla, Inc. (TSLA). In tweets over the weekend, the company's high-profile CEO Elon Musk said the bill, introduced last Friday, was written by lobbyists from Ford Motor Company (F) and the United Autoworkers Federation (UAW) and does not benefit American taxpayers.The bill will be put to vote Tuesday.

Key Takeaways

  • Tesla CEO Elon Musk has criticized a bill that provides credits for EVs manufactured domestically and at facilities with unionized workforces.
  • However, the bill's other credits cut the overall retail price for such vehicles and could boost sales for economically priced electric cars, including Tesla's Model 3.
  • The bill is the latest in a series of measures by the current administration to wean American consumers away from gasoline-powered cars.

Why Is Musk Displeased?   

The bill offers tax credits of up to $7,500 to first-time buyers of electric vehicles that are priced under $55,000. The base amount of the tax credit is $4,000, and depending on the battery pack size, consumers could be credited with another $3,500. Cars equipped with a domestically produced battery could garner a further $500 credit. Tesla's Model 3 vehicles check all three conditions, and their retail price could reduce by a minimum of $8,000 under the bill's provisions.

However, Tesla's vehicles are not eligible for an additional $4,500 credit for electric vehicles manufactured at a domestic facility with unionized workers. Tesla is famously anti-union, while workers at other, more established car makers like General Motors Company (GM) and Ford are represented by the UAW in management negotiations.

Japanese car makers Toyota Motor Corporation (T) and Honda Motor Company (HMC), which have manufacturing facilities without unions in the United States, also criticized the credit scheme. Toyota stated that the plan discriminates "against American autoworkers based on their choice not to unionize." Honda said the bill "discriminates among EVs made by hard-working American auto workers based on simply whether they belong to a union."

A Bill That Boosts Electric Vehicle Sales

Irrespective of Musk's griping, the bill could boost sales for his company's cars. Tax credits for Tesla buyers began halving after the company sold its 200,000th vehicle in 2018. General Motors, which makes the Chevy Bolt, is in a similar situation. The bill revives credits for buyers of Tesla's Model 3 cars and other cheaper models that it may have in the pipeline.

Business publication Barrons calculates that the credits could reduce the Model 3's price by 15%, with the price reduction coming in at 25% for the Chevy Bolt. Tesla does not release exact sales figures for each of its models but is estimated to have sold 167,500 Model 3 vehicles last year. Chevrolet sold more than 20,000 Bolt vehicles last year.

Electric vehicle sales constituted a paltry 3% of all new car sales last year. The new credits coupled with the Biden administration's plans to spend $7.5 billion on EV infrastructure could tip that figure into the double digits. Major car manufacturers have already announced ambitious sales targets for electric vehicles. For example, Ford expects to generate 40% of its overall sales figure from electric vehicles. The company will also benefit from the bill's extension of a five-year $7,500 base consumer incentive for foreign-made cars. Ford has a manufacturing plant in Mexico.

After dropping by approximately 3% immediately following the market opening, Tesla's shares remained mostly unchanged for the day on Monday.

Do you have a news tip for Investopedia reporters? Please email us at
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Twitter. Elon Musk.

  2. Reuters. Tesla CEO Musk's anti-union tweet must be deleted.

  3. Reuters. Toyota and Honda Oppose US Electric Vehicle Tax Plan.

  4. Reuters. Tesla hits 200,000 car sales, meaning lower tax credits for buyers.

  5. Barrons. Federal EV incentives give Tesla and GM a boost.

  6. Car Sales Base. Tesla Model 3 sales.

  7. Statista. US Chevy Bolt sales.

  8. Pew Research. Today's Electric Vehicle Market.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.