Why Trump’s threat to pull GM subsidies is empty fumes
ABC News(NEW YORK) — When President Donald Trump threatened to cut “subsidies” to General Motors on Tuesday, he caused many to wonder: “What subsidy?”
Trump seems to be tweeting about the $7,500 federal tax rebate for electric cars. Every automaker is able to pass along the credit to customers as an incentive. For GM, it’s being phased out anyway.
“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including …. for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!” Trump said in a series of tweets.
Edmunds analyst Ivan Drury told ABC News that GM’s phase-out should begin next year.
Regarding the president’s tweet, he’s “talking about a truth that’s already coming to fruition,” Drury added.
After automakers sell 200,000 vehicles, the tax credit is halved for the next two quarters. GM has sold 196,850 electric cars since October, making 2019 the last year of the electric vehicle credit for buyers of GM cars.
GM has been in Trump’s crosshairs since Monday, when the Detroit automaker announced it was laying off 14,000 workers in North America and closing seven plants worldwide. Three of the four U.S. plants being shuttered are in Michigan and Ohio, pivotal battleground states in federal elections. Another smaller plant near Baltimore, Maryland, is also slated to close.
GM said it would close two additional plants outside North America but did not say if they were in Mexico or China.
GM also announced it would cut 15 percent of its global workforce and streamline production by eliminating unpopular models. The move comes amid slowing sales for the auto industry as a whole.
GM’s Volt, Bolt, and outgoing Cadillac CT6 plug-in model qualify for the rebate. Previously, the Spark EV and Cadillac ELR contributed to the 200,000 vehicle benchmark, according to data from Edmunds.
Sales of competing Ford and Nissan electric models are trailing, with analysts predicting the rebate eligibility for those cars until 2020.
Tesla was the first carmaker to hit 200,000 but prospective owners can get a smaller amount reduced from their taxes. Teslas delivered from Jan. 1, 2019 to June 30, 2019, are eligible for a $3,750 tax credit, while those delivered from July 1 to Dec. 31, 2019, can get a $1,875-tax rebate, according to Edmunds.
“GM is committed to maintaining a strong manufacturing presence in the U.S., as evidenced by our more than $22 billion investments in U.S. operations since 2009,” the company wrote in a statement Tuesday. “Many of the U.S. workers impacted by these actions will have the opportunity to shift to other GM plants where we will need more employees to support growth in trucks, crossovers and SUVs.”
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