Obstacle for EVs

UAW deal eases just one obstacle for EVs

By JOEL KIRKLAND 

The deal between the United Auto Workers and Detroit automakers could ensure unionized workers play a large role in the transition to electric vehicles.

But it’s still unclear whether Ford, General Motors and Stellantis (think Jeep, Dodge and Ram) will be able to successfully transition from gasoline cars to electric ones — and be profitable in the end, writes David Ferris.

The traditional automakers are up against Tesla, which isn’t unionized and has cut the prices of its top selling models. The Detroit Three, meanwhile, have slowed their investments in the electric vehicle market, as they grapple with wavering buyer enthusiasm for still-pricey vehicles.

“When you have higher labor costs, does it change your ability to invest? I would say yes,” Rob Handfield, a business management professor at North Carolina State University, told Power Switch.

Political tightrope

The labor deal comes as President Joe Biden faces a tough reelection campaign in must-win states like Michigan. Through his push to get more EVs on the road, Biden is making a case that an aggressive effort to combat global warming can yield secure jobs for Americans.

But a careful balancing of policy priorities is required to get there.

China dominates the global supply of materials and designs for electric car batteries. Biden’s Treasury Department is expected to set rules soon spelling out how strictly it will enforce a U.S. ban on car companies using battery parts and minerals from Chinese suppliers.

That matters for both electric car makers and buyers. Embedded in Biden’s signature climate law are tax credits that add up to $7,500 in savings on cars built with domestically sourced supplies. That help from the federal government to bring down the cost of purchasing an EV has spurred billions of dollars in spending on EV and battery plants across America’s midsection, from Michigan to Tennessee.

But access to critical minerals such as lithium and nickel is the hitch: North America has virtually no large-scale supply chain for the minerals needed for battery manufacturing. That accounts for half of the EV tax break.