US president Donald Trump last night (27 November) threatened to strip General Motors of a tax credit that makes its electric vehicles more affordable for car buyers, escalating a dispute with the automaker over its plan to halt production at several American plants.
However, a CNBC.com report said GM was on the verge of losing the tax credit anyway.
Trump tweeted: "Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The US saved General Motors, and this is the THANKS we get! We are now looking at cutting all GM subsidies, 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!"
According to CNBC.com, the IRS (US tax office) offers car buyers a tax credit of US$2,500 to $7,500 when they purchase an electric vehicle for use in the US. However, after an automaker sells 200,000 electric vehicles, that manufacturer gets phased out of the programme over the course of about a year.
CNBC.com said GM expects to hit the 200,000 vehicle threshold by the end of 2018. Once it hits that mark, buyers can still claim the full credit until the the end of the following quarter, according to a breakdown of the program from InsideEVs.
Assuming GM does hit the ceiling by year end, its customers would still qualify for a credit of $7,500 for the Chevrolet Bolt electric vehicle and Volt hybrid until the end of March 2019. The credit then shrinks to $3,750 during the following six months, and to $1,875 for the following six months before ending entirely. By that schedule, GM would no longer qualify for the credit after the first quarter of 2020.
CNBC.com said GM, along with Tesla, had lobbied the government to lift the cap.
Dean Heller, a Nevada Republican senator, had proposed legislation that would lift the 200,000-unit limit and phase out the programme for all manufacturers in 2022, Reuters reported last month.
CNBC.com said Trump's threat would face an uphill battle in Washington. Democrats will soon be the majority in the House, and Congress extended the EV tax credit last year, even with Republicans in control of both chambers.