When General Motors announced plant closings and a 15% workforce cut, the plan was to plow savings into electric and autonomous vehicle development, which is seen as the industry’s future.
But selling electric vehicles (EVs) will get tough without a $7,500 credit that the Trump Administration has said will end. Now GM is fighting to keep the consumer tax credit, reported the Associated Press.
Many Republicans say the credit is a subsidy that wastes taxpayer money. The law that provides the credit caps its use when a manufacturer has sold 200,000 vehicles, a number that GM (GM) is close to reaching. President Trump said he was “looking at cutting all GM subsidies, including for electric cars,” when the company announced that it would close auto plants in the U.S. One of Trump’s campaign platforms was a promise to increase manufacturing jobs.
GM and others, including Tesla and Nissan, are pressuring Congress to end the cap and make the credit available going forward. The tax reduction makes electric vehicles more affordable for many. EVs are generally more expensive than a comparable gas-powered car because of the battery cost, according to AP. The premium can easily hit $10,000 and is hard to make up over a three-year lease when gas prices at the pump are at their current levels.
Removing or extending the subsidy would take combined cooperation of the House, Senate, and the White House. With Democrats set to take over the House, unless something happens quickly, it isn’t clear whether anything will change.