President Trump threatened to cut subsidies to U.S. automaker General Motors on Tuesday – including those for electric vehicles – after the company said it planned to scale back its domestic operations.
Sources confirmed to FOX Business on Wednesday that the president directed "appropriate agencies" to look at eliminating the subsidies.
Shares of GM fell after the president’s announcement on Tuesday, and continued declining Wednesday.
|GM||GENERAL MOTORS CO.||54.30||-1.42||-2.55%|
National Economic Director Larry Kudlow said on Tuesday that the administration was going to be looking at the subsidies for electric cars, according to BuzzFeed News.
The carmaker, which is working on ramping up its electric vehicle operations, receives federal subsidies in the form of a $7,500 tax credit for electric cars – a benefit shared by all eligible automakers.
The full 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 early in 2019.
In any case, it is unlikely the president would be able to bar just GM from receiving that subsidy – and removing it from all automakers would require congressional approval, as reported by Vox.
However, the automaker has received more than $50 billion dollars in federal, state and local loans and grants since 2000, which includes funding it received for bailout assistance, according to a subsidy tracker. That includes more than $70 million in grants from the Department of Energy this year alone.
GM did not immediately return FOX Business’ request for comment.
In reaction to GM’s plan, President Trump renewed calls on Wednesday to impose tariffs on all domestic car imports. The automaker announced plans to slash 15 percent of its workforce, while scaling back production across its U.S. plants, in an effort to reduce costs by $6 billion by 2020.