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McDonald's $20 Wage Per Hour Is the Reason Why Subaru Won’t Build EVs in the United States

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Japanese carmaker Subaru will not build its electric vehicles in the United States because the $20 an-hour wage McDonald’s has offered to entry employees is too difficult to compete.

Many foreign EV carmakers have signified intent to establish manufacturing plants in the US because of the new federal tax credit.

But it is not the case with the Japanese carmaker.

Subaru will not set up shop in the US because it cannot offer the same hourly wage as McDonald’s offers.

US Labor Costs

In a company event releasing the financial reports for the third quarter, CEO Tomomi Nakamura said the company finds it difficult to compete with the wage offered by the largest fast food chain in the world.

During the event, Subaru reported positive growth in the company as it nearly doubled its net income to $350.2 million for the quarter.

Commenting on investments, the CEO said the rising labor costs in the US would impede the entry of new investments.

At the moment, he said, Subaru has no plans to establish a manufacturing plant in the US.

McDonald’s in Indiana

The Subaru CEO cited the part-time workers at McDonald’s in Indiana. He said each worker earns $20 to $25 an hour.

He said that temporary workers at Subaru’s assembly plant in Indiana earned as much as McDonald’s workers earned.

The company has a vehicle assembly plant in Indiana. With its 6,000 workers, Subaru assembles Impreza, Ascent, Outback, and Legacy models.

Nakamura said it would be difficult to hire new workers if Subaru built a new plant because they can earn as much as $25 an hour at McDonald’s, Automotive News reports.

Hiring new workers for the company’s Indiana plant is difficult, he added.

Biden’s Federal Tax Credit

In August, President Joe Biden signed into law a landmark climate legislation. Under the new law, a family that buys a new EV will receive up to $7,500.

At least a dozen foreign carmakers have signified their intention to invest in EV production in the country after the law was signed.

The new tax credit will also allow these companies to produce EVs in North America to access the $7,500 incentive.

Aside from the tax credit component, the law requires that the final stage in the car production must be in North America for the EV companies to qualify for an incentive.

Carmakers in the lower segment of the industry will find it hard to compete without the incentive.

But Subaru makes an issue about wages for workers, not the incentive it can get from the government.

Subaru has one electric vehicle for sale in the US, the Subaru Solterra, in partnership with Toyota. Basically, Solterra is the same vehicle as the bZ4X.

Like some Japanese carmakers, Subaru is considered a laggard in the EV sector.

While other carmakers devoted much of their resources to EV development, Subaru only plans to have an EV production in 2027.

Electrek noted that it is baffling for a big carmaker like Subaru to make an issue about wages.

It defies logic that a fast food chain managed to pay its workers a $20 to $25 hourly rate to produce $5 hamburgers, but a carmaker cannot find ways to pay workers who produce $45,000, Electrek said.

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