General Motors is struggling to maintain a valuable tax credit for electric vehicles as the largest American automaker tries to deal with the political consequences of its plans to shut down several factories in North America and lose thousands of workers.
Preserving the $ 7,500 tax incentive for buyers is crucial for GM as the company revolves around internal combustion engines in favor of building battery-powered cars or hydrogen fuel cells. However, layoffs and factory closures could jeopardize GM's initiative to maintain the incentive. It helps make plug-ins more affordable, like the $ 36,000 Chevy Bolt, at a time when competition from other electric vehicle manufacturers is heating up.
GM faces opposition from US President Donald Trump and other Republicans who consider credit a waste of taxpayer money and want it to be eliminated. Trump, who promised an industrial revival in the Midwest, reacted angrily to GM's "transformation" announcement late last month, stating that his government was "looking to cut GM's subsidies, including for electric cars."
The company is already on the verge of being withdrawn from the tax credit program, unless Congress changes a law that limits the range by 200,000 vehicles per manufacturer. Without the incentive, GM may be forced to reduce the price of its electric cars to prevent potential customers from taking their business elsewhere, according to automotive experts.
As evidence of the importance of credit for GM's future, the automaker expanded its lobby footprint in Washington and even joined forces with two rivals, Tesla and Nissan, to ask for the limit of 200,000 vehicles to be disposed of.
On the way to this goal is Republican Senator John Barrasso of Wyoming, the chairman of the Senate's environment and public works committee. Barrasso introduced legislation in October to abolish tax credit, a move he said would save about $ 20 billion over the next 10 years. He argued that the electric vehicle market is already established and "no longer needs the help of the government."
"The idea of subsidies had to do with trying to ensure that electric vehicles were a viable technology," Barrasso said. "Well, that's clearly there."
The tax credit came briefly during a private meeting on Wednesday between Ohio Senators, Republican Rob Portman and Democrat Sherrod Brown, and GM Executive Director Mary Barra, according to a congressional aide familiar with the conversation. As part of the restructuring, GM said it will stop manufacturing the Chevy Cruze at its Lordstown, Ohio plant in March, and is considering shutting down the plant forever.
Portman told Ms. Barra that it is difficult to help with priorities such as credit for electric vehicles when GM is moving production out of Ohio, according to the aide, who was not authorized to publicly discuss the private conversation and spoke on condition of anonymity . .
One of the lobbyists working to salvage GM credit is Kent Hance, a former Texas Tech University chancellor, who is well-connected in Republican circles, according to his online profile. Hance lists her role as fundraiser for former House Speaker Paul Ryan's campaigns for Senate Majority Leader Mitch McConnell, House Majority Leader Kevin McCarthy, and others. He meets Rick Perry, the US energy secretary and former governor of Texas, almost 30 years ago.
GM in early August appointed a former Trump White House employee, Everett Eissenstat, its senior vice president of global public policy, a position that oversees the company's lobbying operations. Eissenstat, however, is not registered as a lobbyist, according to disclosure records filed in Congress. Before coming to GM, he was Trump's deputy assistant for international economic affairs.
Under federal law, the $ 7,500 credit for buyers begins to disappear after a manufacturer has sold 200,000 eligible electric vehicles. GM has estimated that it will reach that threshold by the end of December, just as Bolt will face new and potentially fierce competition.
Sam Abuelsamid, a senior analyst at Navigant Research, said Hyundai and Kia will sell compact SUVs in the US from early next year, which can travel more than 385 kilometers with a single battery charge, about the same as Bolt. Ford will launch a series of new plug-in hybrid models in 2019, including the Lincoln Aviator, Explorer and Escape.
"With the intensification of the market shift from cars to commercial vehicles, it is expected that they will all be more popular than Bolt," said Abuelsamid. To remain competitive with new entrants, "GM will likely have to cut [retail price] of Bolt, as well as any additional EVs they launch next year for the corresponding reduction in tax credits, "he said.
Karl Brauer, executive editor of Autotrader and Kelley Blue Book, said credit is "extremely important" to electric vehicle manufacturers. Lowering the initial cost of the vehicle typically plays a significant role in sales, he said, citing searches that show more consumers would buy electric vehicles if the cars were affordable.
GM has joined forces with Tesla and Nissan, as well as several consumer groups and environmentalists to further expand its lobbying initiative. The EV Drive Coalition, which was launched in November, asked lawmakers in an open letter last week to include a provision in the government bill that eliminates the 200,000-car limit.
"The elimination of the cap by manufacturer will level the playing field for all electric vehicle manufacturers and stimulate innovation among domestic manufacturers, ensuring the leadership of the United States in the global hypercompetent automotive market," the coalition said.
Jeannine Ginivan, a GM spokeswoman, said the tax credit should be modified, but declined to say whether the automaker supports a specific law that would remove the limit.
"We believe that an important part of achieving a zero emission future and establishing the US as a leader in electrification is to continue to provide a federal tax credit to help make electric vehicles more accessible to all customers," said Ginivan in an e- mail address.
In addition to GM's internal lobbyists, four lobbyists from Hance Scarborough, the Austin, Texas-based company Mr. Hance founded in 1994, are working on behalf of GM, including Mr. Hance, according to disclosure records.
GM also hired two other lobbying companies earlier this year to focus on automotive and electric vehicle issues: the Polaris-Hutton Group and the DS2 Group. A fourth company, the S-3 Group, was hired by GM in 2014 and earlier this year added the tax credit to its portfolio of lobbying issues.