Trump threatens to cut GM’s subsidies

Bloomberg

President Donald Trump’s threat to cut subsidies to General Motors Co in retaliation for the automaker’s plan to close US factories was met with immediate skepticism.
While it’s true that GM, like other US automakers, has received substantial federal assistance over the years — including a nearly $50 billion bailout in 2009 — experts cast doubt on the idea that Trump could unwind federal aid for the company by executive fiat.
“It’s very unusual for federal policy to single out one company for different treatment than another company,” said Kristin Dziczek, vice president of industry, labour and economics for the Center for Automotive Research in Ann Arbor, Michigan. “So I don’t know exactly how they would do that.”
GM shares closed down 2.6 percent at $36.69 in New York trading. Shares fell as much as 3.8 percent, wiping out much of its gain a day earlier. The earlier rally was linked to Chief Executive Officer Mary Barra’s plan to bolster cash flow by cancelling production at five plants in the US and Canada and jettisoning slow-selling sedans from the lineup.
Trump wasn’t specific when he tweeted: “We are now looking at cutting all @GM subsidies, including for electric cars.” Aides said the idea was still being explored, but attention focussed on the $7,500 federal tax credit extended to buyers of electric vehicles including the Chevrolet Bolt.
“We are going to be looking at certain subsidies regarding electric cars and others and whether they should apply or not,” Larry Kudlow, director of the White House National
Economic Council, told reporters, just before Trump’s Twitter postings. “Can’t say anything final about that, but we’re looking into it.”
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.
GM is nearing a sales limit for the number of EVs that are eligible for that incentive and efforts to extend it appear to have stalled in Congress. Moreover, altering the credit would require action by lawmakers.