White House economic adviser Larry Kudlow said on Monday the administration is looking to end certain subsidies, including some to automakers, after President Trump threatened to cut federal payments to General Motors.
Kudlow said that while the president cannot legally eliminate subsidies given solely to GM, the administration is looking to end subsidies for electric vehicles in the near future, potentially by 2021, as reported by Reuters.
In its current form, the full electric vehicle credit is only available while a manufacturer maintains sales below 200,000. Tesla, for example, hit that threshold over the summer and therefore the tax credit will be phased out for new vehicle owners. As of Jan. 1, the federal tax credit for anyone who purchases a new Model S, X or 3 will be reduced to $3,750 from $7,500. As of July 1, the credit will be reduced even further to $1,875. As of 2020, the incentive will be entirely phased out.
GM is expected to hit that threshold this year, or in early 2019.
In addition to electric vehicle subsidies, Kudlow said the administration is also looking at eliminating certain federal payments enacted by the former administration, including those for renewables.
Last week, GM announced plans to slash 15 percent of its salaried workforce in North America – about 15,000 jobs – and cease production at five plants in Ohio, Michigan, Maryland and Ontario, Canada, drawing criticism from the president and lawmakers. GM is also eliminating several vehicle models in the U.S., including the Chevrolet Cruze and the Buick LaCrosse.
In response to the announcement, Trump threatened to eliminate subsidies to the company and impose tariffs on all auto imports.
GM CEO Mary Barra is expected to meet with lawmakers on Capitol Hill this week. She met with Kudlow last week after announcing the reorganization plan.