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US President threatens subsidy cut for General Motors' e-cars, but how?

GM shares closed down 2.6 per cent at $36.69 in New York trading on Tuesday

GM shares closed down 2.6 per cent at $36.69 in New York trading on Tuesday | Photo: Reuters
GM shares closed down 2.6 per cent at $36.69 in New York trading on Tuesday | Photo: Reuters
Bloomberg Washington
Last Updated : Nov 29 2018 | 12:00 AM IST
President Donald Trump’s threat to cut subsidies to General Motors in retaliation for the automaker’s plan to close US factories was met with immediate skepticism.

While it’s true that GM, like other US automakers, has received substantial federal assistance over the years — including a nearly $50 billion bailout in 2009 —experts cast doubt on the idea that Trump could unwind federal aid for the company by executive fiat.

“It’s very unusual for federal policy to single out one company for different treatment than another company,” said Kristin Dziczek, vice president of industry, labour and economics for the Center for Automotive Research in Ann Arbor, Michigan. “So I don’t know exactly how they would do that.”

GM shares closed down 2.6 per cent at $36.69 in New York trading on Tuesday. Shares fell as much as 3.8 per cent, wiping out much of its gain a day earlier. The earlier rally was linked to Chief Executive Officer Mary Barra’s plan to bolster cash flow by cancelling production at five plants in the U.S. and Canada and jettisoning slow-selling sedans from the lineup.

Trump wasn’t specific Tuesday when he tweeted: “We are now looking at cutting all @GM subsidies, including for electric cars.”
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