By on December 4, 2018

2018 Chevrolet Bolt - Image: Chevrolet

White House economic adviser Larry Kudlow announced Monday that the Trump administration is seeking an end to federal subsidies on electric cars. Interestingly, the move appears to be related to General Motors’ plant closings and layoffs. The company’s restructuring plan hasn’t gone over well with policy makers or the American public, with many accusing the automaker of abusing years of tax breaks, only to reduce its workforce as a way of pursuing new technologies, businesses, and further bolstering its profit margins.

However, cutting GM out of the electric vehicle subsidies deal is more likely to impact its rivals than anything else. The company said it’s on the cusp of the EV tax credit ceiling already, with the gradual phase-out of those incentives likely to take place through 2019. Yet Kudlow pointed to the elimination of the credits as one way of punishing GM for eliminating so many jobs, echoing President Donald Trump’s threats from last last week.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow explained. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.” 

When asked for a target date, the economic adviser gave his best guess, saying “It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”

According to Reuters, Tesla and GM lobbied Congress for months to lift the cap on electric vehicles or make other changes that would make it easier to move EVs, including new incentives. That’s unlikely to happen until Democrats move in, at which point Congress will be far less inclined to support the Trump administration’s plan to abolish the EV tax credits entirely.

From Reuters:

In October, Senator Dean Heller proposed lifting the current cap on electric vehicles eligible for tax credits but phase out the credit for the entire industry in 2022. Two other senators in September proposed lifting the per manufacturer credit and extending the benefit for 10 years.

Also in October, Senator John Barrasso a Republican who chairs the Senate Environment and Public Works Committee, proposed legislation to end the EV tax credit entirely.

Analysts previously suggested that incentivizing electric vehicles to such a great extent may end up creating artificial demand. While that’s likely the point, some are concerned with what might happen when those credits are suddenly stripped away. Automakers are investing vast sums of their own money into developing these vehicles; it would be a huge blow to the industry if the rug was pulled out from under them. However, you could also make the argument that the credits already placed the auto sector on unstable ground.

While Kudlow still seemed mostly steamed with General Motors, he is also aware of the broader impact EV incentives have on the industry. He made clear any changes in subsidies would not just affect GM, knowing the government couldn’t simply target one automaker. “I think legally you just can’t,” he said.

[Image: General Motors]

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68 Comments on “White House Wants to End EV Subsidies ASAP...”


  • avatar
    28-Cars-Later

    Tesla will do fine, the rest will suffer.

    • 0 avatar
      87 Morgan

      Tesla has used all, or darn near the the number of credits they were permitted under current law. Like GM & presumably Nissan with the Leaf.

      This is political theater for the base, shared outrage. Kudlow and Trump could care less that GM closed up some factories, neither ever had any intention of buying a GM product in the first place.

      • 0 avatar
        28-Cars-Later

        Ah I see your argument, its a meaningless gesture as you argue they’ve used up the credits. We’d need references to determine this.

        • 0 avatar
          87 Morgan

          http://evadoption.com/ev-sales/federal-ev-tax-credit-phase-out-tracker-by-automaker/

          According to this site GM & Tesla are done 2018. My apologies on Nissan, they have 73k credit left, which honestly kind of surprises me.

          • 0 avatar
            28-Cars-Later

            Thanks for the info.

          • 0 avatar
            APaGttH

            It’s pretty well established GM will use up their credits this quarter.

            https://insideevs.com/top-6-automakers-200000-federal-tax-credit-limit/

            Interestingly, Toyota hasn’t even used 50% of the credits up.

          • 0 avatar
            dash riprock

            Starting January 1, the $7,500 tax credit gets reduced to $3,750 for Tesla. For GM, the $7,500 remains for 6 months and then gets reduced to $3,750.

      • 0 avatar
        SunnyvaleCA

        What’s to prevent Tesla and GM (both in the EV tax credit phase out) from re-badging their vehicles and selling them through a different carmaker? In the case of Tesla, they could even gain a dealer network (for better or worse) in the process.

        If Trump wins another 4 years at the helm, it would be better for all car manufacturers to use up those credits as quickly as possible before they are cancelled.

  • avatar
    28-Cars-Later

    “Yet Kudlow pointed to the elimination of the credits as one way of punishing GM for eliminating so many jobs”

    Tis but a flesh wound. Direct the Federal government to stop buying GM product.

    • 0 avatar
      FreedMike

      SOCIALISM!!!! SOCIALISM!!!! SOCIALISM!!!! SOCIALISM!!!!

      (Or something like that. Seriously, what nonsense…a corporate type punishing another corporate type for making him look bad.)

  • avatar
    Asdf

    It’s about time EV subsidies end, hopefully other countries will end similar subsidies as well.

    As expected, EV subsidies have caused a total stagnation in EV development, resulting in embarrassing defects in all BEVs such as the process of fully charging an EV still taking A LOT longer than filling a fuel tank even after all these years, which is nothing short of incredible. Perhaps with the subsidies gone and with EV automakers being forced to make competitive vehicles to maintain relevance, we will see some technological progress again.

    • 0 avatar
      highdesertcat

      Yup, ending subsidies for EVs is long overdue and should never have been initiated in the first place.

      Subsidies, bailouts, handouts and nationalization gives preference to something over another and skews the marketplace.

      • 0 avatar
        Mullholland

        Subsidies, bailouts, handouts and nationalization gives preference to something over another and skews the marketplace. Speaking as an American Tax Payer, I whole-heartedly agree! Here’s one that can go, post haste!

        From Atlantic Magazine:
        “Mississippi and New Mexico, each of which gets back about $3 in federal spending for every dollar they send to the federal treasury in taxes.”

        • 0 avatar
          highdesertcat

          The Atlantic is right. Those two are the two poorest states of the Union.

          New Mexico is deep Blue, even with a Republican Latina Governor, and a sanctuary state where illegal aliens from all over the globe come to get their free health care, free food stamps, free telephones, drivers license and bank accounts, before moving on to other Blue states like NY and CA, because there are NO jobs in NM.

          Oh, yes, and illegals voting is a problem never acknowledged. Sore subject, that one.

          The tax burden on NM tax payers is humongous in relation to their income but fortunately New Mexico derives millions in revenue annually from the oil and natgas industry to help offset some the deficit spending. The US gov’t picks up the rest.

          This may be one reason why so many people choose to move to New Mexico after cashing out in states like CA, NJ and NY.

          Land is dirt cheap. Skies are blue. And the air is clean. And the US gov’t subsidizes all the people on welfare because there are NO jobs and NO incentive to work when a person gets money for doing nothing and foodstamps for free.

          Things are expected to get worse after the newly elected ‘crat will become Governor. Higher taxes yet across the board, to include gasoline and diesel, more spending on welfare services, and more facilities to shelter the illegals.

          ‘crats are 69% of the registered voters and most of them enjoy those freebies while the rest of the ‘crat voters are related to the ones enjoying the freebies.

          The Atlantic is right. But it is only the tip of the iceberg. Much of the money misspend never sees daylight.

    • 0 avatar
      Scott_314

      Priced to market and including carbon impacts, gas is subsidized around $3-4 a gallon. Car makers are also subsidized by tax credits from the moment they’re an idea in an R & D center.

      The EV subsidy levels the playing field and should be continued.

      • 0 avatar
        ToddAtlasF1

        Carbon impacts like plants growing? I’m pretty sure EV rent seekers get to take tax deductions for business expenses just like the oil industry that sustains the world’s population with a resource that people willingly pay more than costs for.

  • avatar
    Fred

    So how many billions have the automakers made in EV? Throw it all in the toilet. Watch them cut back on EV production, shut down more factories, layoff more workers. Not to mention battery manufacturing. And why?, because Obama or some personal vendetta against GM? What a mess of an economic policy.

    • 0 avatar
      28-Cars-Later

      My guess is none of them have profited on the EV, Toyota at this point has probably profited on the hybrid.

      “What a mess of an economic policy”

      Forcing the creation of an EV market was also a huge mess. Tesla carved out a niche, we’ll see what they can do with it. But Leaf? Volt? Bolt? 500e? Where are they? How many trucks does it take to equal the financial loss of a sold EV?

    • 0 avatar
      TwoBelugas

      Have you ever considered that if the credits were created to prop up the EVs who on their own can’t survive in the market, then how much money do you think the manufacturers are making on a car they can’t sell without a subsidy?

      • 0 avatar
        28-Cars-Later

        My point is the whole thing does not make economic and never has.

        • 0 avatar
          Fred

          The main purpose of EV credits was to improve air quality and reduce carbon. Right or wrong that was the purpose. All I want to know is WHY is the Trump administration changing the rules?

          • 0 avatar
            Wheatridger

            It’s a payoff to the coal miners who are his new best friends, and the Koch Bros with their fossil fuel holdings. Hell, Trump would give them incentives for steam powered cars, fired by a mythical substance called “clean coal.” Fortunately, it’s not all up to him anymore.

          • 0 avatar
            Carrera

            The credits were always supposed to fase out. No one is changing the rules.

    • 0 avatar
      APaGttH

      GM EV tax credits for consumers are already at sunset this quarter. This is a non-news story on the impact for EV sales at GM or Tesla. The vehicles have both reached a point where they have to sell on their merits and not on a tax credit for the purchaser.

      The lack of understanding by people wringing their hands here is STUNNING, but that is exactly what this administration thrives on.

      The tax credits didn’t even start with Obama. They go back to the Bush Administration and the Energy Independence Act.

    • 0 avatar
      markf

      “The main purpose of EV credits was to improve air quality and reduce carbon. Right or wrong that was the purpose. All I want to know is WHY is the Trump administration changing the rules?”

      Cause they know this is nonsense…

  • avatar

    I say put tarriffs on GM cars engineered abroad. These tariffs would aid US white collar jobs. I find it strange a lot of GM cars are still surviving in China. Could the next CT6 be engineered in China? The only thing I trust GM to do is outsource US jobs.

  • avatar
    jatz

    The Bolt is a 40K car with less interior space than an 18K Honda Fit. That discrepancy will buy a lot of gas. Relative build quality of the two adds even more vinegar.

  • avatar
    APaGttH

    So GM for all intent and purpose has used up their tax credits and will start to sunset them in 2019 anyway – but the rest of the industry gets punished.

    https://insideevs.com/top-6-automakers-200000-federal-tax-credit-limit/

    Perfect logic. So this basically doesn’t hurt Tesla or GM, but puts the screws to Nissan, Toyota, BMW and Ford – however, this is positioned to “punish” GM.

    Ironically, the Bolt is built at the Orion plant in Michigan.

  • avatar
    indi500fan

    The $7500 gift cards from taxpayers to virtue-signalling coastal elites buying 6 figure luxury cars should come to a halt. We would have been far better off giving $7500 gift cards to poor people to replace unsafe and polluting beaters.

    • 0 avatar
      APaGttH

      I wish the government handed out $7500 tax credit gift cards for doing CNG conversions of ICE vehicles. The cost to convert is prohibitive but the benefits are many. Roughly the same torque and horsepower on CNG. Not a horribly complex conversion. A network of filling stations already exists as well as the ability to fill up at home with an added fill station. Dramatically reduced emissions. The main downsides is the tank will eat up some storage room and the conversions without a tax break are $10K to $12K per vehicle. Only a long-term fleet of livery, delivery, or commercial vehicles would benefit from the conversion process — without a tax break.

      I’d have been all over a CNG conversion incentive.

      • 0 avatar
        ToddAtlasF1

        Cost is that thing that allows you to weigh the tradeoffs of an expenditure and arrive at a decision that maximizes utility. Brainwashing is winning its battle with intelligence when people think decisions can be made correctly by removing cost from the process.

    • 0 avatar
      Kek

      Let me make a prediction and hope it gets in your head.
      Climate change will hurt the poor the most. When the rich in Florida pack and move to inner states due to repeated hurricanes, the poor in inner states will be priced out of their homes.
      There is an argument for an EV with a responsible amount of range as a daily driver reducing local pollution and overall emissions. I dont agree we need a 3 second 0-60 car with 250 miles – so your comment holds true for Tesla. I dont think the Leaf / Bolt / Fit EV / eGolf are elites. The intent is good, execution could have been better.

      • 0 avatar
        28-Cars-Later

        You are correct but its the same as it always was.

      • 0 avatar
        markf

        “Climate change will hurt the poor the most. When the rich in Florida pack and move to inner states due to repeated hurricanes, the poor in inner states will be priced out of their homes.”

        Would those repeated Hurricanes include the 10 year drought of hurricanes? Or is that all part of Global Warming?

        https://www.usatoday.com/story/weather/2014/05/14/hurricane-hiatus-usa-florida/9000343/

  • avatar
    mcs

    @indi500fan: “The $7500 gift cards from taxpayers to virtue-signalling coastal elites buying 6 figure luxury cars should come to a halt.

    While you’re dead wrong about the virtue-signalling part (unless the virtue is that they’re faster), you’re right that the subsidy shouldn’t be going to high end cars. A $7,500 subsidy isn’t going to impact the sales of $130k or higher cars (or even $50 or $60k). It’s ridiculous that someone can spend close to a million on a Rimac and still get that $7,500 subsidy.

    The high-end EVs are fast, powerful, and quiet. All of the owners I’ve ever talked to cite driving dynamics as the reason they absolutely love the cars. That market is doing well. Even Porsche is upping their production numbers for the Taycon and the cross-turismo based on the number of deposits they’re getting. In fact, the dealers will probably tack on an extra $7,500 ADM over the regular ADM and effectively pocket the subsidies for themselves. Get rid of it.

    If they do keep the subsidy, they should restrict it to US produced cars under $50k. As far as poor people replacing unsafe and polluting beaters, inspection laws take care of that.

  • avatar
    JoDa

    I don’t know why they would do this. The American Taxpayer doesn’t mind.

  • avatar

    Larry Kudlow from CNBC? Hi is a liberal, what else you would expect from liberal? There is no place for subsidies in liberal economics. Larry was against GM and Chrysler bailouts too.

    • 0 avatar
      star_gazer

      @Inside Looking Out

      I disagree with you. I’ve listened to the Larry Kudlow Show on WABC for years. He had worked under Reagan as associate director for economics, and I feel that he is as conservative as they come. Before his current stint, he was very opposed to tariffs and quoted Milton Freeman to support his stands.

      One reason that I am fond of Kudlow is his honesty. During the Obama administration Kudlow feared rampant inflation. When he was proved wrong, he ‘fessed up to it and apologized repeatedly on his radio show.

    • 0 avatar

      star_gazer that is definition of liberal economics from Wikipedia:
      “Economic liberalism is an economic system organized on individual lines, which means the greatest possible number of economic decisions are made by individuals or households rather than by collective institutions or organizations. It includes a spectrum of different economic policies, such as freedom of movement, but its basis is on strong support for a market economy and private property in the means of production. Although economic liberals can also be supportive of government regulation to a certain degree, they tend to oppose government intervention in the free market when it inhibits free trade and open competition.”

  • avatar
    vvk

    Oil industry subsidies should be eliminated, too. While they are at it.

    • 0 avatar
      APaGttH

      Ooooooooooo…and now we have crickets from the pro-tariff it isn’t price controls it’s a tool crowd.

      Ya, tariffs aren’t price controls and minimum wage isn’t wage controls. Uh-huh. In some looney brains.

  • avatar
    Carrera

    Not to worry. They can send them all to Europe. The EU has an open war on diesel and will probably declare diesel illegal in 2-3 years and gasoline engines illegal in 7-10. Everyone will have electric pods since everything else will be either illegal or prohibitively expensive due to taxes on “dirty” technology.

  • avatar
    DeadWeight

    That Volt was a real raging success!

    Impala
    Cruze
    LaCrosse
    CT6
    ATS
    Camaro
    Malibu
    CTS
    XT4 (real, total, complete pile of sh!t, and laughably overpriced)
    “New” Silverado/Sierra Twins with the 90s-era interiors
    Encore
    Envasion/Invasion
    Acadia
    Regal
    Enclave
    And a new, even more cheaply assembled, of Rubbermaid-grade parts, Equinox, worse than the last gen.

    Real winning lineup there!

  • avatar
    vagvoba

    Never understood why taxpayers are subsidizing Tesla luxury car sales.
    I believe that some of the EV subsidies are a worthy investment in our environment, but I don’t want more giveaways to those who can afford $80K+ cars.
    If anything, it makes sense to subsidize cheap electric cars, like the Bolt and the Leaf, or larger EVs that may potentially become volume sellers.

  • avatar
    0Gravity

    Not sure about the EV credits, but I’m an analyst that covers renewables so I can say with confidence that Kudlow’s comment about ending subsidies for renewable energy is at best ill-informed or a deliberate lie. It’s not something that can be done through executive or administrative action; it would require action by Congress and Congress even under previous full Republican control has shown no interest in re-negotiating the long term phase out subsidies revised in 2016 compromise agreement. The subsidies for wind and solar are slowly being phased out already and reducing each year in allowed value. This admin won’t be able to prematurely alter the current law’s structure. Watch what this administration does, not what it says. Bunch of blowhards and liars


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