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GM shares plummet after Trump threatens to cut all subsidies



"Very disappointed with General Motors and its CEO, Mary Barra, for shutting down plants in Ohio, Michigan and Maryland," Trump wrote on Twitter. "We are now looking to cut all @GM subsidies, even for electric cars."

The shares of GM (GM) decreased up to 3.8% in the comments. GM closed down 2.6%, eliminating part of Monday's gains.

It is not clear to which subsidies Trump was referring.

A person familiar with the issue told CNN Business that GM is not aware of any significant federal subsidies that the company is receiving beyond a $ 7,500 tax credit for additional expenses, which goes to the consumer, not the company.

The federal government grants that tax credit for each vehicle purchased. However, this subsidy disappears once an automobile manufacturer reaches 200,000 electric cars sold. And GM can reach that threshold by the end of the year, making its tax credits for 2019 and 2020 smaller.

"The whole industry qualifies for this, it's nothing exclusive to GM," said Jeremy Acevedo, industry analysis manager at Edmunds.

Tesla (TSLA), the leading manufacturer of electric cars, already reached the milestone of 200,000 earlier this year. Your tax credit will begin to reduce on January 1.

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

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

GM job cuts: This is what seems to transform a century-old company.
Between 2009 and 2014, the Department of Energy granted loans and grants for the development of electric vehicles and energy saving technology. Tesla, Nissan and Ford participated, but GM did not, according to the Department of Energy.

GM also does business with the federal government, including through the sale of used cars and trucks by various agencies. Chevy Suburbans is a staple for the Secret Service that protects Trump and other federal officials. GM also manufactured "The Beast", the improved Cadillac that transports the president.

Preparing for the future

GM job cuts hurt the promise of Trump's campaign to regain US car jobs. But Barra is not paying attention to the upcoming elections. She is taking steps to prepare GM for the future of transportation: driverless cars, electric vehicles and sharing the trip.

"It's because of the long-term viability of the company," Acevedo said. "They are duplicating what they perceive as the future so they do not fall behind."

While GM did not cite tariffs for the closure of the plant, Trump's commercial repression has created problems for the auto industry. GM has said that the higher prices of raw materials and the * winds against the currency * will cost the company $ 1 billion. The main costs of GM's basic products are steel and aluminum, which have risen in price in response to Trump's tariffs.

The battle with Trump puts Barra in a difficult place. Last year, Barra and other business leaders agreed to be part of a board of executive directors formed to advise Trump. However, Trump's advisory panels collapsed in August 2017 after a backlash over the president's comments about the violence at a white nationalist rally in Charlottesville, Virginia.

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


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