President Trump is angry at GM after it announced it would be closing up to four U.S. manufacturing plants. GM, in turn, says that Trump administration’s tariffs on imported steel have cost it $1 billion. In response to GM’s announcement, President Trump threatened he would be “looking at cutting all GM subsidies, including for electric cars.”
Trump’s tendency to attack specific companies, Amazon being another frequent target, for perceived personal or political slights is extremely troublesome from a free market perspective. Wielding the power of government to force companies into making decisions based on the preferences of politicians instead of economic factors is a recipe for corruption and waste.
That said, reducing subsidies to GM is in alignment with good policy, so long as one company is not singled out relative to others in its industry.
And the good news for Trump is that ending electric vehicle subsidies to GM requires doing absolutely nothing.
Once the company hits its 200,000th electric vehicle sale, which it is expected to do in the near future, it will trigger a phase-out of the EV tax credit for consumers of GM vehicles. Tesla is the only other company that has hit the threshold thus far, meaning GM will soon be at a relative disadvantage to most other electric vehicle manufacturers (don’t feel too bad for them, they were more than happy to accept this trade-off when the subsidies gave them a leg-up against non-EV manufacturers).
Despite the ease with which crony EV subsidies can be gotten ride of–by literally doing nothing and letting them die–some Congressional geniuses from both parties want to bring them back. Thankfully, though, no extension for EV credit was included in the recently unveiled tax extenders package. And Trump’s new interest in the issue may just help ensure they are allowed to expire as intended.
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Image credit: priceman 141 | CC BY 2.0.
