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Trump threatens to cut federal incentives for GM’s electric cars

17K views 87 replies 34 participants last post by  TimBolt  
#1 ·
#2 ·
Lol.

The GM Lordstown plant that is closing is near where I grew up in NE Ohio, which was an economically-depressed wasteland back then in the 80's. Now you can't drive 10 miles there without seeing a billboard for an opiate addiction hotline number.

The plant used to employ thousands of workers, more recently cut down to one shift and between one and two thousand before the closing announcement. Trump campaigned there and said he was going to bring jobs back to all the factories there, or build new factories there that would employ them, and of course he won that county and also Ohio. The comments section of some of the local news articles are filled with people blaming Obama for the plant closing.
 
#5 · (Edited)
#28 ·
That is very true. But if Congress does eliminate the EV tax rebate, Both GM and Tesla has done their jobs. And if the new Congress votes to extend the rebate, they must exclude all the foreign brands, and allow the rebate only for U.S. brands (Chrysler, Ford, GM, Tesla, and any new domestic brands).
 
#8 ·
I'm wondering if Mary Barra can put together a deal whereby she reopens some of those plants in exchange for favorable legislation. If GM is to be believed, they would like to see ZEV mandates and other EV-friendly measures. Trump would be able to claim victory even if he got totally played. It could turn out well.
 
#9 ·
Not going to happen. GM has excess production capacity and car models that aren’t selling. The GM plant closings address both of these issues. GM is making prudent business decisions based upon market conditions.

GM has also announced that the Cruise (not Cruze) autonomous vehicle program is getting increased funding, including a nearly $3 billion investment from Honda. Mass production of the Cruise autonomous vehicle is scheduled to begin in 2019, and GM is hiring thousands of new workers for the Cruise division. These vehicles will be built at the same Orion Michigan plant that builds the Bolt, and they will use the Bolt EV platform.

For once, it appears that GM won’t be caught flat-footed as the auto industry undergoes its greatest transformation since Henry Ford developed the mass production assembly line. That’s a good thing.
 
#21 ·
GM is an imagined legal identity, not a person, so it can't care about anything ever. That said, I doubt management loves telling people they are laid off, but they have the responsibility to remain competitive. If they don't, nobody has a job. That's how just about all businesses operate.

Ford vastly improved the assembly line process thereby allowing more cars to be made with less labor. That is to say, not hiring more people than necessary. The business/employee relationship was different back then, and it wasn't entirely unique to Ford. Times have changed, and we live in a somewhat globalized labor market; meaning if labor gets too expensive to be competitive, it moves to where it is cheaper, or automation replaces it.

The whole reason the world is able to support 7 billion people is because of the extensive leveraging of machines and fossil fuels.
 
#24 ·
Here's something I can't understand, maybe (seriously) some of you can explain it to me. I've seen in the left leaning media that the tariffs are killing the auto industy. I'm going to pick on Ford because it uses a lot of aluminum in trucks. So there's a tariff on alum... the entire truck isn't made of aluminum, only 650lbs of the entire truck. One would think it'd be cheaper to pay the tax (tariff) on a fraction of the truck than an import tax on the entire vehicle. And in the event you can bypass the aluminum tariff by sending a completely assembled truck, then there's a problem with the law I would say! Did I miss something?

I also know that Ford makes vans in Brazil and ships them here as passenger vans.... there's a place in NJ that removes the glass windows and seats and replaces the windows with steel blanks. It's a way to import a work truck using passenger car tariffs.
 
#32 ·
As Enzeder pointed out, the simple solution to the whole tax credit issue is to kill it for all EVs. That way the three companies who have done the most to promote EV adoption (Nissan, Tesla and GM) will not be handicapped vs the laggard manufacturers.

While we are at it, let's eliminate the fossil fuel and solar/wind tax incentives, too. That way we can put the whole transportation/energy sector of our economy on a level playing field and let the markets decide which is the most valuable. That is, of course, unless we are not really free market proponents.
 
#43 ·
To be clear, while a level playing field sounds fair - it isn't. Seems a bit like putting a high school team and NFL team on the same field. Both are playing the same game by the same rules on the same field, but I wouldn't call it fair. And naked capitalism has no ethical or moral standards. The petroleum industry has had a long time to entrench and enact legislation favourable to itself. And on top of that we might actually want place incentives/disincentives for good/bad behavior. For example, removing the EV tax credit and replacing it with a carbon tax might be better - I've yet to hear a compelling argument against it.
 
#33 ·
I’m not against these sort of tax incentives. If one believes that fuel efficiency and alternative energy are important national or global problems and that EV adoption would help mitigate them, then they are certainly justified. The problem is that they are often ill conceived. If the incentives would have been made “at large” so the first N number of buyers got the incentive, rather than tying them to manufacturer, then the early adopters would have gotten the benefit without the negative incentives GM and Tesla are currently facing. There is still time to do this, but I’d say the likehood is small.
 
#47 ·
I tend to avoid political discussion on EV boards (at least those in the EV portion of the board), but ...

I am all *against* tariffs (in general) - there is a reason that they were dropped. (Go read some history, folks.)

However, I am all *for* reciprocal tariffs - exactly the same (or at least based on the same criteria) as tariffs in other countries, towards U.S.-made goods. For example : "you have a requirement of (say) 60% native-made components before you impose a tariff - we are going to create the same thing in the US for your country only. You want it changed - change your tariff laws."

Now, the issue is a LOT more complicated than the above, as some countries (China, cough cough) require building a certain amount of "in country" plants for technology transfer (read: stealing ideas and patents). We *could* do the same thing : "tariffs if you don't build X% in-country", but that would only work if there were a large multi-1st-world agreement on it, as otherwise, all the business would go to other countries and the US would be shut out. In fact, China has been investing their profits for the past decade+ by buying businesses in Europe (including fairly major airports and luxury wine growers and even industrial plants).

It is a very complex issue that isn't simply solved.

Having said all that, can this issue be moved to the "this ain't about the Bolt" portion of the site, so that I can more easily ignore it (since all of you are wrong and I don't want to have to read about it :D ).

(I think that it is 250% obvious, but my last comment in parentheses was meant to be a massive tongue-in-cheek joke.)
 
#51 ·
I am all *against* tariffs (in general) - there is a reason that they were dropped. (Go read some history, folks.)

However, I am all *for* reciprocal tariffs - exactly the same (or at least based on the same criteria) as tariffs in other countries, towards U.S.-made goods. For example : "you have a requirement of (say) 60% native-made components before you impose a tariff - we are going to create the same thing in the US for your country only. You want it changed - change your tariff laws."
Yeah, and there are other complications like domestic subsidies some companies benefit from.

In the news today Kudlow talking about ending the EV tax break: https://www.reuters.com/article/us-usa-trump-autos/white-house-seeks-to-end-subsidies-for-electric-cars-renewables-idUSKBN1O22D4
 
#53 ·
Nice post SparkE.

To summarize, tariffs harm both parties that trade with each other. The only time tariffs are warranted is in retaliation for a tariff, and should be implemented less than a 1 to 1 ratio. Game theory has proved this.

I'm not up to speed on Chinese to US tariff ratios, so cannot comment on the wisdom of Stable Genius, but I do know it's foolish to seek a trade balance through tariffs.

In my view, taxation is more effective than subsidy. If we can clearly identify a problem, then it makes more sense to penalize the things that contribute to the problem than to subsidize the things we hope will mitigate the problem. In other words, if smoking is bad for health, it's more effective to tax cigarettes than to subsidize bubble gum and sunflower seeds. Government's role is to protect the commons, not promote special interests. Anytime you see a subsidy, just read that as corruption disguised as "job creation" or "environmental protection", or whatever else they are saying to distract us from the truth.
 
#57 ·
I'm not up to speed on Chinese to US tariff ratios, so cannot comment on the wisdom of Stable Genius, but I do know it's foolish to seek a trade balance through tariffs.
I agree that tariffs are dumb, and I have neither love nor respect for Stable Genius - but I have the sense that the Chinese have been getting away with Scott-free on their trade practices and so I empathize with his desire to at least shake them up a bit. It's more than anyone else has done, and I think it has the potential to bring some benefits. Let's just hope they outweigh the costs.
 
#54 ·
The Trump administration cannot end the EV tax credit by executive order. Congress created the EV tax credit and only Congress can repeal it. I doubt that the current lame-duck Congress would be able to push through a last minute bill to end the EV tax credit. Certainly the incoming Congress won’t pass such a bill.
 
#60 ·
One of the first hits of the google search :

japanese car sales US 1970s quota


found this :
https://www.heritage.org/environment/report/the-costly-truth-about-auto-import-quotas


The Costly Truth About Auto Import Quotas
February 1, 1985

Edward L.
...
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(Archived document, may contain errors)
2/l/85 74

T HE COSTLY TRUTH ABOUT AUTO IMPORT QUOTAS
Imports into the U.S. of foreign automobiles, mainly from Japan, have been restricted since April 1981 by a so-called "voluntary restra int agreement." The quotas were imposed in response to pleas by the U.S. auto industry that it needed time to grow strong enough to compete with the imports on the free market. The' quotas have not come cheap. Last year alone-, it is estimated that Americ a ns paid an extra $5 billion because of the import limits. At the same time, the U.S. auto industry had its best sales year since.1979--earning a recbrd'$10 billion profit. The import restrictions are due to expire at the end of this March. The United Auto w orkers. Union, Chrysler and Ford want the quotas con- tinued. General Motors, on the other hand, opposes extension, and the Reagan Administration seems to be leaning in this direction. Were the quotas to be removed, the winner would be the U.S. consumer. w inning too would be the U.S. auto industry, which would become more competitive. The "voluntary" limit on cars imported from Japan was negotiated by the Reagan Administration at the urging of the then-ailing auto industry. From 1981 through .1983 the Japa n ese were allowed to ship 1.68 million cars annually to the U.S.; last year the ceiling was 1.85 million. By restricting the number of imported cars, Washington made it possible for the auto companies to raise prices without fear of losing business to less expensive competitors. Wharton Econometrics calculates that the average price per new car has risen by $2,600 since the market restric- tions were imposed. Brookings Institution economist Robert Crandall estimates that $400 of this price hike per U.S.-mad e car was possible .only because quotas reduced competition. With 1984 sales of nearly 8 million U.S. cars, the quotas took $3.2 billion out of the pockets of consumers and gave it to the auto industry. Crandall further estimates that the low supply of imp o rted cars mandated by the quotas added $1,000 to the pricetag of every Japanese car sold in the U.S., a total of $1.85 billion in extra consumer costs. The total 1984 bill for U.S. consumers due to auto trade restraints: $5 billion. Some argue that quotas should be extended because the U.S. auto industry is still not economically sound. This is a strange argument.

The 8 million American-made cars sold in 1984 represent the best yearly sales since 1979-. Ford showed a thumping 26 percent sales increase over 1983; Chrysler sales were up 17.3 percent; and General Motors rose 13.2 percent. Total industry profits jumped from an already record $6.1 billion in 1983 to $10 billion in 1984. And these record profits were achieved while selling 2 million fewer ca r s than in the record sales year of 1977. This means that the record profits were due to the higher prices charged as a result of import restrictions. It certainly is not a weak industry that can make more money by selling fewer products. Others argue that quotas must be extended to allow U.S. automakers to become "competitive" with the Japanese. This is an old protectionist refrain, refuted by the facts. History shows that trade protection removes the incentives for companies to make the difficult decision s needed to become more cost competitive. It is doubtful, for example, that the recent wage settlements and executive bonuses at U.'S. auto companies would have been quite as generous had quotas not protected U.S. automakers from the Japanese. Currently, t h e Japanese can produce a subcompact car for around $2,000 less than the Americans. This is not due merely to less expensive Japanese labor. University of Michigan professor David Cole estimates that it takes 200 hours of labor to produce a U.S. car compar e d to 100 hours of labor per Japanese car. There is little indication that Chrysler or Ford, the companies seeking an extension of quotas, are narrowing this gap significantly. GM, on the other hand, which seeks repeal of the quotas, has taken a major step towards matching the Japanese. Its new $5 billion Saturn Corporation will compete head-to-head with Japanese small cars. GM plans to design the most efficient assembly line possible. At least one U.S. auto company seems to understand that bold, innovative moves are the key to successful competition, not trade protection and government favors. Retaining auto quotas contributes to the dangerous trend towards trade protectionism. Currently the U.S. is negotiating with the Japanese to lower barriers to such U. S . goods as farm products and telecommunica- tions equipment. The Administration is also seeking to open Japan's markets U.S. to services and to remove quotas against U.S. goods. Continuing the auto quotas could sabotage these efforts. If auto quotas are e x tended, they threaten to become permanent. They would become a "tax" levied by automobile companies on the U.S. consumer. If the American auto industry is to be competitive, then competition must be allowed. Notes GM Chairman Roger B. Smith: "The discipli ne of worldwide competition... speeds up the pace of technological innovation and industrial modernization, which means growth and more and better jobs." The case is clear. Auto .quotas should go. Edward L. Hudgins, Ph.D. Walker Fellow in Economics

F or furt her information: Robert W. Crandall, "Import@Quotas and the Automobile Industry: The Costs of Protec- 'Je tionism," The Brookin 3: W. Summer 1994. Roger B. Smith, "It's Time to End the Auto Quotas," The Washington Post, January 30, 1985, p. A19. Edward Mi ller, "IJ.S. Car Makers Post Another Good Year," The Washington Post, January 5, 1985, p. Fl.
 
#74 ·
It's progressive because the poor spend a larger percentage of their income on housing and food. Perhaps throw public transportation and some others in there as tax free too. I haven't crunched any numbers; just made a wild guess as to generally how it would work.

Perhaps by presenting subsidies as direct payments from the government rather than keeping more of your own money, it would be less susceptible to corruption.
 
#86 ·
Also appeared in our local newspaper - at least it was in the online digital version I get. Love the online version - fingers without ink, articles appear complete without having to thumb through pages and much lower price. Electric Car > Electric Newspaper >:)