Arizona Could Become Canada’s Biggest Ally in Fighting Electric Vehicle Tax Credits

From its arid desert climate to its fickle center-right politics, the southern border state of Arizona hardly seems to have much in common with Canada beyond wary winter birds.

But President Joe Biden’s controversial plan to use protectionist tax incentives to promote US-made electric vehicles, which threatens misery for the Canadian auto industry, is spawning all kinds of strange bedfellows.

With its proximity to both Silicon Valley and the US-Mexico border, without the high taxes and regulation of California’s tech-savvy neighbor, the Grand Canyon state strives to host the EV revolution that looms, a vision that Biden’s plan jeopardizes.

“We are going to be one of the next centers in the United States for next-generation electric vehicle manufacturing,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council.

“We just want, from a federal policy standpoint, a fair and balanced approach for consumers to be able to buy the products they want. Whether they are produced in states like Arizona or other states across the country, we believe a prudent policy to induce consumers, behavior must be fair. “

Arizona is far from the only state opposing the measure, which, if passed, would allow prospective EV buyers to enjoy tax credits worth up to $ 12,500 as long as their preferred car or truck has been assembled in the U.S.A. USA and built with unionized workforce.

But few have been more vocal critics. Last month, Phoenix Chamber of Commerce Executive Director Todd Sanders and Jaime Molera, the Arizona director of a conservative environmental group called The Western Way, wrote an op-ed denouncing a “poorly written” plan that would “hinder “the state’s electric vehicle ambitions.

What people are reading

Sanders, for his part, is not consoled by the fact that Biden’s Build Back Better bill, the $ 1.75 trillion social and climate spending package that contains the tax credits, suffered a setback before Christmas when the senator renegade Democrat Joe Manchin declared that he would not. support it

“What you learn early on is that nothing is dead,” Sanders, a veteran of public policy debates within government at the state legislature, said in an interview.

“If we can get Canada involved in this, obviously our friends in Mexico and then our congressional delegation, that begins to at least raise the concern that we have that this is not necessarily the right path.”

Along with up-and-coming EV players like Rivian, Nikola, and ElectraMecchanica, Arizona is also attracting parts and manufacturing service providers, including Barrie, Ontario-based Jomi Engineering Group, which by mid-year will have about 120 employees in its business. new facility at Casa Grande, just south of Phoenix.

“You can’t fight that,” Jomi founder and president Michael Hoy said of the growing gravitational pull of the electric vehicle industry to the southern US.

“(We) couldn’t build the Canadian operation further; we probably never would have had the opportunity like we do, or we would have been competitive enough, if we hadn’t gotten closer to our customers.”

In October, Arizona Governor Doug Ducey was one of 11 Republican state governors who wrote to congressional leaders denouncing Biden’s plan as an unfair use of taxpayer money.

“We cannot support any proposal that creates a discriminatory environment in our states by punishing autoworkers and auto companies because workers at their plants chose not to unionize,” the letter says.

“Congress should not enact proposals that favor vehicles produced by one workforce over another, particularly when doing so dramatically limits consumer choices and undermines the most important carbon emission reduction targets.”

In the 50-50 Senate, West Virginia’s Manchin has been the focus of speculation as to whether he won’t do so over his support for Build Back Better. Less attention has been paid to an equally unpredictable Democratic colleague, Senator Krysten Sinema, whose moderate-conservative politics nicely sums up the purple state she represents: Arizona.

As a right-to-work state (by law, prospective employees cannot be required to join a union) with a vested interest in a strong and growing electric vehicle industry, Arizona focuses only on eliminating the $ 4,500 of the tax credits that focus on US-assembled, union-built vehicles.

“That should make them almost the optimal ally,” said Roy Norton, a former senior diplomat who served two seasons at the Canadian Embassy in the 1990s and 2000s before becoming a resident diplomat at the Balsillie School of International Affairs in Waterloo, Ontario. .

“We don’t want to eliminate subsidies. We only want to eliminate subsidies exclusively for US-made vehicles, and Arizona should be on precisely the same page insofar as it is a right-to-work state that disagrees with a President”. and an administration that is a bit hindsight. “

Officials in Ottawa confirm that the Arizona Congressional delegation, and Sinema’s office in particular, continue to be the focus of the federal government’s lobbying efforts, which peaked late last year with visits from multiple emissaries. to DC, including Prime Minister Justin Trudeau.

Biden, however, makes no secret of his affinity for unionized blue-collar workers, nor his ultimate goal of restoring the former luster of the once powerful American manufacturing sector. Both, along with reducing carbon emissions, are the main goals of a tax credit scheme that the White House says is close to its heart.

Although he didn’t specifically mention EV tax credits, Biden himself pointed out strongly on Friday that he has not given up on the Build Back Better bill, which is likely to come to the fore again sometime in the next few. weeks or months.

Whether it will continue to include tax credits, or whether the EV vision emerges in a different way, remains an open question.

In response to the latest US employment report, the president on Friday reiterated his vision for a resurgent US manufacturing sector, fueled by an economy growing “bottom-up and half-out.”

“Since day 1, my financial schedule has been different. It’s about taking a fundamentally new approach to our economy, one that sees the prosperity of working families as the solution, not the problem, ”he said.

“Let’s make what we sell in America made in America, so we don’t risk foreign supply chains and shipping delays.”

This Canadian Press report was first published on January 9, 2022.