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Trump plans to end electric car subsidies in response to GM cutbacks

By Amanda Schmidt, AccuWeather staff writer
December 04, 2018, 2:44:18 PM EST

White House economic adviser Larry Kudlow said on Monday, Dec. 3, that the Trump administration wants to end subsidies for electric cars and other items, including renewable energy sources.

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

Kudlow said he expected subsidies for electric cars would end by 2020 or 2021.

electric car

An electric car is charged at the Motorshow in Essen, Germany, Friday, Nov. 30, 2018. The performance festival show sports and classic cars, tuning and motorsports for car fans until Dec. 9 in Essen. (AP Photo/Martin Meissner)

Electric car buyers currently get tax credits of $7,500 per vehicle, including those made by General Motors, under federal law.

But that phases out as each company sells 200,000 cars, a level that a handful of companies, including GM, are approaching.

GM has said it expects to hit that threshold by the end of 2018, which means under the current law, its tax credit scheme would end in 2020.

Tesla Inc said in July that it had hit the threshold. Therefore, Tesla buyers will lose the full $7,500 credit by the end of the year unless the law is changed, hitting $3,750 for the first half of 2019 and $1,875 in the second half of 2019.

Other automakers may not hit the cap for several years.

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Renewable utilities also get tax credits for producing wind power and for installing solar power equipment. Those incentives, enacted before former President Barack Obama took office, are on track to phase out in the coming years.

The recent White House remarks were made in response to a question about what the administration would do about GM’s plans to layoff 15,000 people and shutter five plants across North America.

President Donald Trump said on Tuesday, Nov. 27, that he was “very disappointed” GM was closing plants in the United States and warned that the White House was “now looking at cutting all GM subsidies,” including for its electric cars program, the Associated Press reported.

The company's plans have sparked outrage in Washington from both parties.

Trump GM electric cars

In this Nov. 26, 2018, photo, President Donald Trump speaks at a rally in Biloxi, Miss. Trump said Tuesday, Nov. 27, that he was “very disappointed” that General Motors was closing plants in the United States. (AP Photo/Alex Brandon)

Experts say the White House cannot change the cap unilaterally, despite Trump's threats directed at GM.

Kudlow made clear any changes in subsidies would not just affect GM. “I think legally you just can’t,” he said, according to Reuters.

It’s unclear how the administration plans to cut the tax credits, as Congress enacted them and would have to act to end them.

Democrats will take control of the U.S. House in January and are unlikely to agree to end subsidies for electric cars, as many Democrats have been pushing for additional incentives.

Conservatives have pushed back against subsidies and other policies meant to promote renewables over traditional energy sources. Meanwhile, Democrats are calling for a Green New Deal that would transition the country to 100 percent renewable energy for electricity, according to The Hill.

Tesla and GM have lobbied Congress for months to lift the cap on electric vehicles or make other changes, but they face an uphill battle to make changes before the current Congress expires, Reuters reports.

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