Auto industry stocks are showing vulnerability to activist politicians who can rattle the markets and hurt the share prices of public companies with threats to enact policies that would thwart management teams seeking to maximize shareholder value.
General Motors Co. (NYSE:GM) is one of the auto industry stocks that pulled back in November, after incurring the wrath of President Trump and members of Congress by announcing plans to cut jobs and potentially close six U.S. factories. President Trump indicated GM’s actions could trigger a federal review of any subsidies that the company is receiving.
The U.S. government is helping all auto makers that build electric vehicles by offering buyers a tax credit of up to $7,500. The subsidy soon will expire for Elon Musk-led Tesla Inc. (NASDAQ:TSLA), which has sold the most electric cars in America and is nearing its 200,000-electric-vehicle limit for tapping the U.S. government subsidy.
However, GM, Ford and other electric car automakers have been making business decisions based on the availability of the subsidy for their prospective customers. The tax credit will be available until 200,000 qualified electric vehicles have been sold in the United States by each manufacturer.
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Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce,Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz.
