Trump threatens to yank EV tax credits from GM

Keith Laing Nora Naughton
The Detroit News
President Donald Trump

Washington — President Donald Trump is threatening to cut General Motors Co.'s electric-car subsidies in retaliation for the company's plans to idle four U.S. plants, cut 8,000 salaried employees and threaten the jobs of 3,300 hourly workers in three states.

"Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland," Trump tweeted Tuesday. "Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get!

"We are now looking at cutting all @GM subsidies..." he continued, adding in a subsequent tweet: "... including 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!" 

GM responded by saying it is "committed to maintaining a strong manufacturing presence in the U.S.," citing its $22 billion in investments in American facilities since the company emerged from federally induced bankruptcy.

"Yesterday’s announcements support our ability to invest for future growth and position the company for long-term success and maintain and grow American jobs," GM said in its statement. "Many of the U.S. workers impacted by these actions will have the opportunity to shift to other GM plants where we will need more employees to support growth in trucks, crossovers and SUVs. GM’s transformation also includes adding technical and engineering jobs to support the future of mobility, such as new jobs in electrification and autonomous vehicles."

Later Tuesday, Trump told The Washington Post he blamed GM's plant actions and planned salaried job cuts, as well as declining stock markets, on interest rate increases ordered by the Federal Reserve, led by his appointee, Chairman Jerome Powell. "Not even a little bit happy," Trump told The Post.   

In his campaign and the early days of his administration, Trump promised to revive manufacturing jobs in Michigan, Ohio and other industrial states even as he frequently criticized GM and its competitors on Twitter for building vehicles in Mexico and China. Trump's criticisms and demands come at a time when automakers are wrestling with a quickly transitioning industry amid tariffs imposed by the Trump administration that hurt the companies' bottom lines.

But threatening to target GM by revoking electric-vehicle tax credits rings hollow, said Erik Gordon, a business professor at the University of Michigan, because the law cannot target a single company for tax breaks and because a president cannot unilaterally alter laws duly passed by Congress.

"The law cannot be arbitrary and capricious," Gordon said. "But the fact that the president habitually says things he knows he can't do is because he’s sending a metaphorical signal. In this case, he's saying 'maybe I can’t take away your EV credit, but i will go to whatever length I can to punish you.'"

GM already is inching closer to the federally mandated 200,000-vehicle cap for the $7,500 tax credit offered to buyers of electric cars, with an estimated 196,850 qualifying vehicles tallied through October, according to Edmunds. GM, makers of the Chevrolet Bolt and gas-electric Volt, has said it expects to hit the cap before the end of the year. 

Trump's tone echoes similar criticism from the United Auto Workers. In a video statement Tuesday, President Gary Jones said: "It’s as simple as this: When General Motors needed us, we were there. Now General Motors needs to be there for us. We call on GM today — just like GM called on us a decade ago: Invest in the U.S., invest in the American citizens who have invested in you."

GM said Monday that it will cease production next year at its Detroit-Hamtramck and Warren Transmission plants in Michigan, its Lordstown Assembly in Ohio, its Oshawa Assembly in Ontario and its Baltimore Operations in Maryland plants. Work will stop next year at predetermined dates, but plants will not officially close. The future of those facilities will be determined during 2019 negotiations with the UAW.

The company is also planning to lay off nearly 6,000 salaried workers next year after a buyout program last month only had 2,250 takers, according to a memo sent to employees by CEO Mary Barra and obtained by The Detroit News. The salaried buyouts and the layoffs together will affect 8,000 North American employees and a number of global executives, none of whom are part of the senior leadership team.

GM said the plants ceasing production in 2019 also signals the end of the products made there for the U.S. market. That means the end of the line for the Cadillac CT6 and XTS; the Chevrolet Volt, Cruze and Impala; and the Buick Lacrosse.

GM's announcement Monday touched off a firestorm in Washington with lawmakers in both parties accusing GM of giving blue collar workers the shaft in Michigan and Ohio.  

“I’m being pretty blunt that General Motors better not think they’re shipping production to Mexico and that I’m going to support them,” U.S. Rep. Debbie Dingell, D-Dearborn said. “And I’m not going to support NAFTA 2.0 if it means the companies can keep shipping jobs to Mexico.”

U.S. Sen. Rob Portman, R-Ohio, added in a statement: "For decades, workers in the Mahoning Valley have made a commitment to GM, and today GM let Northeast Ohio down.”

And Haley Stevens, a newly elected Democrat poised to represent Michigan's 11th Congressional District, said: "The government shouldn’t and can’t really tell industry what to do and how to run their business, but we can certainly set the tone and set the climate for business to take certain directions. I believe that we need to hold the Trump administration accountable for reckless economic policy."

Trump — who said Monday he believes GM's decision "has nothing to do with tariffs" imposed by his administration on China and the European Union — continues to face criticism for trade policies that have resulted in tariffs on foreign steel and aluminum and a host of Chinese goods. GM and other automakers have cited the policies as financial headwinds that impede their ability to do business globally. 

Critics seized on comments Trump made during a campaign rally in Ohio in 2017 where he promised listeners that factory jobs would remain in the Midwest. 

"They're all coming back," he said of auto jobs that had left Ohio. "Let me tell you folks in Ohio and in this area, don’t sell your house. Don’t sell your house. Do not sell it. We’re going to get those values up. We’re going to get those jobs coming back, and we’re going to fill up those factories or rip them down and build brand new ones. It’s going to happen."  

Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive, said GM's decision likely had more to do with shifting consumer preferences that are heavily titling the auto market toward SUVs and pickup trucks. But he added that the president's tariffs are playing a role in creating additional headwinds for the auto issue. 

"It's difficult to hang this around Trump's neck," Chesbrough said, noting the auto industry is shifting away from the mantra that manufacturers should offer a car for every phase of life. "The industry has changed. They're focused on profitability, and those vehicle lines just weren't profitable," he said of the models that GM is planning to discontinue. 

"The tariffs aren't helping," Chesbrough continued. "GM themselves said the steel and aluminum tariffs cost them $1 billion in profits. That money would have helped keep these plants open for a little while longer, but that's not the whole story. It's a really a portfolio issue." 

Trump's biggest leverage over GM is likely to be the bully pulpit he wields, Chesbrough said: "If the president was up there saying 'I'll never buy a GM again in my life,' there are a whole lot of Silverado buyers out there who might listen."

Staff writer Melissa Nann-Burke contributed to this report.