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Home / Business / GM shares collapse after Trump threatens to cut back on all subsidies

GM shares collapse after Trump threatens to cut back on all subsidies



"Very disappointed with General Motors and its CEO Mary Barra for closing plants in Ohio, Michigan and Maryland," Trump tweeted. "We are now checking the reduction of all @ GM subsidies, including electric cars."

The GM (GM) share fell 3.8% from the comments. GM closed 2.6%, making up part of Monday's gains.

It is not clear what subsidies Trump was referring to.

A person familiar with the matter told CNN Business that GM did not know of any major state subsidies received by the company beyond a $ 7,500 tax credit. that goes to the consumer, not to the company.

The federal government grants this tax credit for each purchased plug-in vehicle. However, this subsidy goes away when an automaker reaches 200,000 electric cars sold. GM could reach this threshold by the end of the year and reduce tax credits for 201

9 and 2020.

"The entire industry is qualified for this, it's not something exclusive for GM," said Jeremy Acevedo, industrial analysis manager at Edmunds.

Tesla (TSLA), the leading manufacturer of electric cars, had already reached the 200,000-milestone year. The tax credit will decrease on January 1st.

In a statement, GM said it remains committed to "maintaining a strong manufacturing footprint in the US." The company has reported investments of more than $ 22 billion since 2009. The restructuring announced on Monday aims to support future growth and long-term success. GM said that "many" affected workers will have the opportunity to switch to other GMO plants.

"We appreciate the measures that this administration has taken on behalf of the industry to improve the overall competitiveness of US industry," said GM.

  GM job cuts: what a transformation of a century-old business looks like

The cuts in GM jobs violate Trump's campaign promise to return American auto jobs. But Barra does not pay attention to the next elections. It is taking steps to prepare GM for the future of transport: driverless cars, electric vehicles and carpools.

"It's for the long-term viability of the company," said Acevedo. "They double in terms of what they perceive as the future so they will not lag behind."

While GM did not set any tariffs for plant closure, Trump's trading frenzy created a problem for the auto industry. GM said that higher commodity prices and * headwinds of the currency * will cost the company $ 1 billion. GM's most important raw material costs are steel and aluminum, both of which have risen in response to Trump's tariffs.

Fighting with Trump puts Barra in a difficult place. Last year, Barra and other business representatives agreed to work for a CEO Council that advises Trump. However, Trump's advisory panels collapsed in August 2017 after the President's comments on the violence at a white nationalist rally in Charlottesville, Virginia, had receded.

Peter Valdes-Dapena of CNN Business contributed to this report.


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