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Trump Threatens to End GM Electric-Car Subsidies

Bloomberg logo Bloomberg 11/27/2018 Justin Sink, Ryan Beene and Ari Natter
A ClipperCreek Inc. charging plug is seen connected to a General Motors Chevrolet Volt electric vehicle at a charging station in Los Angeles. © Bloomberg A ClipperCreek Inc. charging plug is seen connected to a General Motors Chevrolet Volt electric vehicle at a charging station in Los Angeles.

(Bloomberg) -- President Donald Trump said he’ll consider killing subsidies for General Motors Co. over the automaker’s plan to close factories and cut U.S. jobs, a threat that was met with immediate skepticism on Capitol Hill.

GM fell as much as 3.8 percent as of 3:30 p.m. Tuesday in New York, wiping out much of its gain a day ago. The earlier rally was linked to Chief Executive Officer Mary Barra’s plan to boost cash flow by shutting plants in the U.S. and Canada and jettison struggling sedans from the company’s lineup.

Trump wasn’t specific about the subsidies he was referring to, but consumers are eligible for a $7,500 federal tax credit toward the purchase of electric vehicles like the Chevrolet Volt. GM is nearing a sales limit for the number of EVs that are eligible for that incentive before it starts to wind down over the course of more than a year.

GM, Tesla Inc. and Nissan Motor Co. formed a coalition earlier this year to lobby to have the purchase subsidy extended. Tesla surpassed 200,000 cumulative EV sales in the U.S. earlier this year, and Bloomberg NEF analysts project that GM will probably reach 200,000 cumulative sales of plug-in vehicles this quarter.

A senior Republican Senator cast doubt on the likelihood that Trump will succeed in taking away GM’s subsidies, which are part of statues passed by Congress.

“I don’t know that’s going to be a response that actually gets much traction around here,” South Dakota Senator John Thune told reporters. “I’m not sure I know how they would go about doing that.”

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Asked about Trump’s tweet, White House Press Secretary Sarah Huckabee Sanders told reporters at a briefing, “I don’t know that there’s a specific timeline” for taking action against GM.

“He’s looking into what those options might look like,” she said.

Trump’s tweets follow repeated expressions of anger earlier from the White House over GM’s plan to close five North American factories and cut about 14,000 jobs.

“There’s great disappointment that it seems like GM would rather build its electric cars in China rather than the United States,” Larry Kudlow, director of the White House National Economic Council, told reporters Tuesday, just before Trump’s missives. “We are going to be looking at certain subsidies regarding electric cars and others and whether they should apply or not. Can’t say anything final about that, but we’re looking into it.”

Some members of Congress have proposed raising the cap on EVs eligible for federal tax credits or to otherwise extend the credit, including Senator Dean Heller of Nevada, where Tesla operates a large battery factory. Heller, a Republican, lost his re-election bid this month to Democrat Jacky Rosen.

Tax legislation unveiled by House Republicans Monday didn’t include an extension of the electric-vehicle tax credit sought by the coalition that includes GM and Tesla.

The Senate has yet to make their version of the legislation, though Senator Orrin Hatch, the Utah Republican who chairs the Finance Committee, said earlier this month it’s possible an extension will be included in the bill.

To contact the reporters on this story: Justin Sink in Washington at jsink1@bloomberg.net;Ryan Beene in Washington at rbeene@bloomberg.net;Ari Natter in Washington at anatter5@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net;Alex Wayne at awayne3@bloomberg.net;Jon Morgan at jmorgan97@bloomberg.net

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©2018 Bloomberg L.P.

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