GM stock falls after Trump threatens to remove all subsidies

"Very disappointed in the decision of General Motors and its general manager, Mary Barra, to have closed factories in Ohio, Michigan and Maryland," Trump tweeted. "We are now considering removing all @GM subsidies, including for electric cars."

The stock of GM (GM) fell by more than 3% and fell to the minimum of the session for comments.

The White House economic adviser, Larry Kudlow, said at a press conference at the White House that he had met Barra on Monday to talk about the layoffs. "It's a big disappointment, obviously," he said.

Kudlow said the Trump administration will consider subsidies for "electric cars and others". He did not specify how much GM would receive federal grants.

"The United States has saved General Motors, and it's the THANKS we're getting!" Trump tweeted.

In a statement, GM said it remained committed to "maintaining a strong manufacturing presence in the United States." The company has highlighted over $ 22 billion in domestic operations since 2009. GM said the restructuring announced Monday was intended to support future growth and long-term success. And GM said that "a lot" of affected workers will have the opportunity to move on to other GM factories.

"We appreciate the steps this administration has taken on behalf of the industry to improve the overall competitiveness of manufacturing in the United States," said GM.

Trump targets grants

The largest federal subsidy for electric cars manufactured by GM is about to disappear on its own. And speeding up its demise would hurt US car buyers.

Job cuts at GM: this is what the transformation of a century-old company looks like

The federal government provides a $ 7,500 federal tax credit for each rechargeable vehicle purchased. However, this subsidy disappears as soon as a manufacturer reaches 200,000 electric cars sold. And GM could reach this threshold by the end of the year, which would reduce its tax credits in 2019 and 2020.

"The whole industry is qualified for that, it's not exclusive to GM," said Jeremy Acevedo, head of industry analysis at Edmunds.

Tesla (TSLA), the leading manufacturer of electric cars, has already broken through 200,000 units earlier this year. His tax credit will begin to decrease on January 1st.
Between 2009 and 2014, the Department of Energy also granted loans and grants for the development of electric vehicles and technologies to save energy. Tesla, Nissan and Ford participated, but not GM, according to the Department of Energy.

GM also works with the federal government, including selling cars and trucks used by various agencies. The Chevy Suburbans are an essential part of the secret service that protects Trump and other federal officials. GM has also manufactured "The Beast", the inflated Cadillac that carries the president.

Prepare for the future

Job cuts at GM have undermined Trump's campaign promise to bring jobs back to the US auto sector. But Barra does not pay attention to the next elections. It is taking steps to prepare GM for the future of transportation: driverless cars, electric vehicles and car pooling.

"It's for the long-term viability of the company," said Acevedo. "They double what they perceive as the future so as not to be left behind."

Although GM did not mention the tariffs for closing the factory, the trade crackdown by Trump has created problems for the auto industry. GM said rising commodity prices and * unfavorable currency factors * would cost the company $ 1 billion. The main costs of GM 's commodities are steel and aluminum, whose price has risen in response to Trump' s tariffs.

The battle with Trump puts Barra in a difficult situation. Last year, Barra and other corporate executives agreed to sit on the Board of Directors-General formed to advise Trump. However, Trump's advisory groups collapsed in August 2017 as a result of an adverse reaction to the president's comments on the violence at a white nationalist rally in Charlottesville, Virginia.

Peter Valdes-Dapena of CNN contributed to this report.

Source link