'Not much punch' behind Trump's threat to cancel GM subsidy: expert
CTVNews.ca Staff with files from Richard Madan
Published Tuesday, November 27, 2018 9:58PM EST
Last Updated Tuesday, November 27, 2018 10:04PM EST
U.S. President Donald Trump threatened to cut an electric vehicle subsidy for General Motors on Tuesday over planned plant closures, but an industry expert said it would have little impact on the company.
The looming closures, which include four U.S. plants and one in Oshawa, Ont., are expected cost 14,000 American jobs and another 2,900 positions in Canada.
Trump, who campaigned on a promise to bring back manufacturing jobs and won key Rust Belt states in the 2016 presidential election, wrote on Twitter that “we are now looking at cutting all GM subsidies, including for electric cars.”
Jeremy Acevedo, an auto industry analyst with Edmunds in Santa Monica, Calif., told CTV News that GM would barely notice an electric vehicle (EV) subsidy cut.
“Maybe it’s a threat, but not with much punch behind it,” he said.
The EV subsidy is a $7,500 tax credit for consumers who buy electric vehicles.
“The way that leasing goes, and it’s so popular here now, there are a lot of opportunities for GM and the dealership network to actually absorb those tax credits and pass on a cheap lease to shoppers out there,” said Acevedo.
However, the credit -- which is industry-wide -- gets phased out after a company sells 200,000 electric vehicles, and GM is just months away from hitting that target.
....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!— Donald J. Trump (@realDonaldTrump) November 27, 2018
“Cutting electric vehicle subsidies for GM really would matter almost not at all,” Acevedo explained. “Really, they’re going to hit that all on their own. They’ve had tremendous momentum selling their EVs and plug-in vehicles, so they’re very close to that 200,000 mark.”
Trump spoke to Prime Minister Justin Trudeau about the GM job losses on Tuesday, with both leaders expressing their disappointment.
GM said it will shut down five plants in Oshawa, Detroit, Ohio, Maryland and Michigan. The company has also announced plans to cease operations at three more plants outside North America by the end of 2019.