America is expected to soon embark on a massive $7.5 billion EV charging infrastructure plan. The goal is to convince consumers to buy EVs as part of greater efforts to reduce greenhouse gas emissions. Unfortunately, a majority of EVs like the Porsche Taycan and Tesla Model 3 are just too expensive for most buyers. That will change but it won't happen overnight. The Biden administration's bold goals could be good for America and domestic jobs, but Canada isn't celebrating.

America's northern neighbor sent a letter to the congressional leadership in Washington, DC arguing that "protectionist elements" of the EV tax credits will likely damage the North American auto industry as a whole. In addition, they go against existing trade deals. Canada is also concerned about the future of its domestic auto production industry.

"If passed into law, these credits would have a major adverse impact on the future of EV and automotive production in Canada, resulting in the risk of severe economic harm and tens of thousands of job losses in one of Canada's largest manufacturing sectors," wrote Canadian Trade Minister Mary Ng. "US companies and workers would not be isolated from these impacts."

The proposed EV tax credit would eliminate the automaker cap on EV credits. Tesla, for example, ran out of those credits long ago. In addition, the credit would increase up to $12,500 in consumer rebates. Things get really controversial when it involves unions. EVs built by union workers would get $4,500 worth of credits. Automakers like Ford and GM whose factory workers are unionized are fine with this.

Competitors including Tesla, Toyota, Honda, and Hyundai are not because their workers lack union membership. There's also a proposed $500 credit for vehicles whose batteries were made in the US. Starting in 2027, every EV must be built in America in order to get the full $12,500 credit. Things get complicated regarding Canada, as Ng points out, because every vehicle assembled in the country has around 50 percent US-made parts.

"Canadian unions and labor standards are as robust as those in the United States," Ng's letter continues. "Therefore, it is imperative that Canadian assembly, including Canadian unionized assembly, is not discriminated against and is eligible for the maximum incentive available." US officials have yet to comment on the letter but it doesn't appear the legislation's key supporters are willing to back down on the union-favored approach.