US to fund its car industry $12 billion to go electric

The Biden administration is making up to $12 billion available to the American car industry to fund the conversion of their factories for producing battery-electric, hydrogen fuel cell, and hybrid vehicles to comply with the goal of half of new cars sold being electric by 2030.

“This funding will help existing workers keep their jobs and have the first shot to fill new good jobs as the car industry transforms for future generations,” President Joe Biden said.

Avoiding strikes at Detroit Three

The commitment comes right in the middle of negotiations the United Auto Workers (UAW) union is having with the major American carmakers concerning the threat of job losses with the transition to EVs. UAW is a trade union for workers in the car, aerospace, and metal industries, with some 150 000 members working at Ford, GM, and Stellantis (with Jeep and Chrysler). It is currently negotiating a new four-year contract.

Shawn Fain, the current president of UAW, who started his career as an electrician at a Chrysler casting plant in 1994, threatened to have his 150 000 members go on strike if he couldn’t get a new and better contract before September 14th.

A strike at the big ‘Detroit Three’ carmakers, producing half of America’s light vehicles, at the same time would be something never seen before. Last week, UAW members voted overwhelmingly in favor of authorizing a strike.

Fain wants to eliminate tiered employment with lower wages for starters as a priority and declared somewhat a ‘war’ on the carmakers with his demands, including proposals for a 46% raise, a return to traditional pensions, and a 32-hour work week. But the Detroit Three defend their point of view, saying labor costs are already higher than those of non-unionized rivals such as Tesla.

Favoring better labor conditions

The government sets no employment requirements to get the funding. Still, projects with better labor conditions will have a greater chance of receiving the grant, an Energy Department official told Reuters news agency.

The $12 billion for converting the US car industry includes $2 billion from the Inflation Reduction Act  (IRA), passed by Congress last year, and $10 billion in loans from the Energy Department’s Loans Program Office. Another $3,5 billion in funding will go to domestic battery manufacturers.