A rendering of Ford's planned $5.8 billion battery manufacturing complex in central Kentucky.
The dust has not yet settled on a newly proposed federal incentive package for electric vehicles, but Ford is not waiting around for the ink to dry. The company has just released an ambitious new plan to accelerate its production of electric vehicles (EVs) in the U.S. The multi-state investment includes both manufacturing and workforce training, and it validates President Joe Biden’s plans for linking rapid climate action with green jobs and union labor.
Ford watchers probably anticipated the company’s electric vehicle announcement on Monday, which includes a new “mega campus” for manufacturing EVs in Tennessee, two new battery plants for manufacturing EVs in Kentucky, and a $90 million electric vehicle workforce development initiative in Texas.
Others, though, may be surprised. After all, just a few months ago Ford weathered a storm of criticism from the United Auto Workers union and others after word leaked that the company planned to build new EVs in Mexico.
However, it seems that other activity behind the media curtain has paid off for Ford.
Reportedly at the behest of Ford and the United Auto Workers, earlier this month House Democrats in Congress proposed a package of reforms for electric vehicle incentives, extending far beyond the current federal tax credit.
The reforms also apply specifically to EVs made with union labor. If passed, the new incentives would hand Ford and other unionized, domestic manufacturers a powerful new opportunity to woo car buyers with a new generation of affordable EVs.
Conversely, the incentive package leaves foreign companies like Toyota and the notoriously non-union U.S. automaker Telsa Motors out in the cold. In particular, the proposal comes at a crucial time for Tesla. The company is an exclusive manufacturer of EVs with a made-in-the-USA pedigree. As such, Tesla initially had a significant advantage over existing U.S. automakers, and the company dominated domestic sales of EVs for a good 10 years. More recently, other automakers have begun to chip away at the EV market. Aided by cushy new federal incentives, unionized U.S. automakers could quickly turn the non-Tesla EV trickle into a flood.
Telsa co-founder and CEO Elon Musk may have read something in the tea leaves last spring when President Biden unveiled a job plan friendly to unionized workers and their employers. Last month, the president cemented his focus on union labor when he invited Ford CEO Jim Farley, GM CEO Mary Barra, Stellantis North America COO Mark Stewart, and UAW President Ray Curry to join him for a White House announcement on auto emissions.
The announcement was widely seen as a snub against Tesla, though that is not necessarily the case. As an exclusive EV manufacturer, Tesla was never impacted by emissions regulations. Its presence at a White House announcement on auto emissions would have been somewhat off-topic.
Musk could have used the opportunity to point out that Tesla solved the emissions problem many years ago, in contrast to other automakers. Instead, he took to Twitter to issue a veiled complaint that it seemed “odd that Tesla wasn’t invited,” which only underscored the impression that his company had been snubbed.
Additionally, Musk’s behavior during the initial months of the COVID-19 pandemic reinforced the impression that excluding Tesla from the event really was a snub, indicating that the Biden administration is not confident in Tesla’s ability to work with federal agencies, other automakers, and union workers to achieve crucial national goals such as tamping down the pandemic while boosting worker wages and bringing the climate crisis under control before it gets any worse.
In that context the new EV incentive reforms appear deliberately designed to send a message to Tesla. It’s still an open question if the message was received, but so far it appears not. Last week, Musk complained on Twitter that the reforms were “written by Ford/UAW lobbyists, as they make their electric car in Mexico.”
“Not obvious how this serves American taxpayers,” Musk added, neglecting to mention that Tesla received a taxpayer-supported shot of adrenaline in 2010 when the the U.S. Department of Energy issued a $465 million loan that enabled the company to attract high-dollar, private-sector investors. Tesla continues to negotiate tax deals with state legislators as it seeks to expand its U.S. operations.
Making matters worse, last week Musk also deployed Twitter to amplify a false meme about the president’s health. However, it looks like Musk is the one caught napping.
It is not obvious that the EV incentive package proposed by House Democrats will ever be legislated into existence. On the other hand, Ford may have tipped the balance by forging ahead with ambitious, job-creating plans for manufacturing EVs in the U.S. That puts the pressure on legislators to come through with incentives that get the car-buying public in the mood to buy new cars.
In addition to pressure from auto industry lobbyists, the votes of union workers and job seekers are also in play. Tennessee, Kentucky and Texas are all known for undercutting the power of unions, but The Detroit News cited a statement indicating the UAW is on board with the Ford EV manufacturing plan.
“[Ford's] announcement will produce about 11,000 combined quality jobs,” UAW President Curry told the Detroit paper. “The UAW looks forward to continuing our long-time partnership with Ford as consumers transition to make electric vehicles in the right way.”
“The UAW has always taken a lead in manufacturing innovation with our employer partners. We look forward to reaching out and helping develop this new workforce to build these world class vehicles and battery components,” Curry added.
On its website, UAW also emphasized its support with a statement from one of its regional directors, Mitchell Smith, whose territory includes Tennessee and Kentucky. "Today’s announcement is a tremendous opportunity for working families in Kentucky and Tennessee to have thousands of industry leading jobs come to our area,” Smith said of Ford's plan.
In addition, pressure could come from the large and growing renewable energy sector, including powerful corporate energy buyers and utilities that are eager to sell more clean kilowatts for EV charging into the nation’s electric grid.
There are still many legislative unknowns surrounding the proposed EV incentives, and so far Democrats in Congress are carrying all the water. However, with the additional prompting from Ford and other automakers, perhaps Republican legislators in Congress and statehouses could stop attacking American democracy and start working toward a more dynamic, sustainable economy.
Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes. She is currently Deputy Director of Public Information for the County of Union, New Jersey. Views expressed here are her own and do not necessarily reflect agency policy.