Quarterly Newsletter

Spring Newsletter
April 20, 2023

  • Leaders on both sides of the political aisle have said the U.S. will not default on its financial obligations and that there will be an agreement concerning the debt ceiling. However, House Republican leadership views this as an opportunity to raise government spending issues.
  • Debt limit brinkmanship risks creating financial turmoil that could tip the U.S. economy into recession—and a potentially serious one. It would undermine vehicle demand by cutting household income/wealth, further weakening consumer confidence, and driving up auto lending rates.
  • If this crisis resembled 2011, companies would be hard hit by equity prices and widening corporate debt spreads. Today’s still-high equity market valuations could exacerbate a market slide.

No matter what party has controlled Congress or the White House, over the last 10 years, the process of raising the debt ceiling limit has become a partisan exercise. So far, the President, Senate leadership, and Speaker McCarthy have all agreed not to tie cost control and budget policy to raising the debt ceiling. However, we expect all sides will engage in partisan rhetoric throughout the process. As a result, our approach is to advocate for raising the debt ceiling, engage in constructive policy debates about budget reforms, and avoid the partisan fray.

A default would have far-reaching repercussions across the U.S. economy, negatively impacting businesses, households, and the government. With U.S. Treasuries serving as a benchmark for mortgages, car loans, credit cards, and corporate debt, a spike in interest rates would negatively impact sectors that rely on access to affordable credit.

The 2011 debt limit episode saw the S&P 500 Index plunge roughly 225 points (-16.8%) from the final days of July through the first days of August. Corporate bond spreads widened, by 56 bps on BBB, after S&P downgraded the U.S. government’s debt.

GM supports an increase in the debt ceiling to avoid the far-reaching repercussions that would result from a default.


Spring Newsletter
April 20, 2023

  • GM is working across the industry and with our suppliers to communicate mature node applications should be given priority in timing to support the increased production of semiconductors for automotive applications.

In July 2022, Congress passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) & Science Act.

Though the CHIPS & Science Act has already been signed into law, some rules on how it will be implemented are still being addressed. On February 28, 2023, the Commerce Department released a Notice of Funding Opportunity (NOFO) for commercial fabrication facilities incentives. This is the first of three funding opportunities provided through the CHIPS and Science Act of 2022. The other notices, which are focused on material suppliers and R&D facilities, will be released in late spring and early fall.

As you may recall from previous GM Engage communication and outreach requests, GM has been supportive of CHIPS funding from the start, especially investments in legacy/mature node technology that will help fortify the auto industry’s transition into an all-electric future. We support the delivery of the appropriated funds in the most efficient and prompt manner possible to ensure the domestic supply chain of legacy/mature nodes is resilient and robust. To do so, we believe the U.S. Department of Commerce should ensure it is supporting this industry through substantial direct funding incentives that compete with foreign subsidies.

GM’s perspective and issues on the new criteria are noted as follows:

For current and mature-node semiconductor funding, the Commerce Department has four main priorities:

1)   Increasing production for current-generation and mature-node chips in the U.S. by end of decade;
2)   Maintaining technology leadership in compound semiconductors and other specialty chips;
3)   Coordinating with allies and partners to ensure resilient production of and access to current-generation and mature node chips; and,
4)   Ensuring chipmakers will be able to respond more nimbly to supply and demand shocks.

Five areas of concern for GM and our suppliers in the Notice of Funding Opportunity:

1)   CHIPS Direct Fund: Commerce expects that most CHIPS Direct Funding awards will range between 5-15% of the project capital expenditures while the rest of the incentives will be made up of loans and loan guarantees. It is expected that applicants will also utilize the Investment Tax Credit (ITC) to supplement their awards.

  • Immediate concerns are that the U.S. semiconductor industry needs grants, not loans, to compete with foreign subsidies. Also, the ITC only provides a 25% credit on a qualifying investment in a semiconductor facility.

2)   Incentive Timing: Commerce will begin accepting leading-edge chip funding applications on March 31, while current-generation, mature nodes, and back-end chip manufacturers can submit applications on June 26, 2023. There is currently no estimated time between when the application is submitted, and the award is received.

3)   Workforce/Child Care Requirements: Any applicants requesting CHIPS Direct Funding over $150 million must provide a plan for access to onsite childcare for facility and construction workers. Applicants are also required to provide workforce training opportunities for construction and manufacturing employees.

  • GM is working to receive greater clarity around the authority to impose childcare requirements as part of the funding applications.

4)   Stock Buybacks: CHIPS funding applicants must provide information on their intentions concerning stock buybacks and their plans to reinvest capital into the domestic semiconductor industry.

  • The stock buyback language in the CHIPS and Science Act was added by a group of Democratic senators to ensure grant dollars would not be used to offset buybacks. This language, however, does not directly prohibit CHIPS funding recipients from using these incentives to free up their own funds.
  • Companies that commit to refrain from stock buybacks for five years will receive preferential treatment in their application.
  • Stock buybacks and dividend payments are examples of steps well-managed companies make to reward all shareholders and maintain robust access to the capital markets.

5)   Dedicated Funding for Mature Nodes: The recently released CHIPS for America: Vision for Success document references $2 billion for mature nodes. The Strategy for the CHIPS for America Fund document released in September of 2022 states that the Department expects funding for mature and current-generation chips to equal at least a quarter of the available CHIPS incentives funding, or approximately $10 billion.

  • It is critical that mature nodes receive, at a minimum, $10 billion from CHIPS Act funding to strengthen the domestic production of these semiconductors.


Spring Newsletter
April 20, 2023

Each year, State Dealer Trade Associations seek to modify state auto dealer franchise laws to the dealers’ benefit, with the intention of limiting manufacturers’ authority to implement policies and practices established through dealer sales and service agreements. On average, more than half of the State Dealer Associations will introduce legislation each year.

Typical legislative issues have the potential to significantly increase GM’s operating costs and add complexity to managing our dealer network. More recently there has been an increase in activity designed to restrict manufacturer eCommerce initiatives such as reservations, over-the-air (OTA) updates, feature subscriptions and access to dealer data. Dealer Trade Associations have also stepped-up legislative efforts to require manufacturers to use aftermarket labor time allowances for warranty labor reimbursement and have been leveraging national labor unions to help promote the issue. Estimates indicate this issue presents a risk to GM of over $900 million annually.

While the efforts of GM State Affairs Team have successfully defeated or mitigated much of the annual dealer franchise legislation over the years, the victories are short lived. Dealer trade associations repeatedly return in subsequent legislative sessions to reintroduce issues they were unsuccessful in achieving in the prior year. Each year dealers add more issues, intentionally leveraging some issues against others, increase their campaign contributions, coordinate more dealer engagement, and grow their legislative impact.

Consequently, it is imperative that OEMs, like GM, invest the additional resources necessary to protect and grow our political capital to keep up with this growing threat. You, as a GM Engage Advocate, are a key asset in GM’s efforts to raise our voice on these issues. Look for issue updates specific to your state when employee voices are needed to reinforce our GM State Affairs Team.


  •    State Dealer Trade Associations seek to expand Dealer Franchise Laws that give them rights beyond OEM Sales & Service Agreements and policies that would significantly increase GM’s operating costs and add complexity to managing our dealer network.
  •    After successfully mitigating annual Franchise Dealer Legislation over the years, Dealer Trade Associations repeatedly return in subsequent legislative sessions to reintroduce any issues they were unsuccessful in achieving in the prior year.
  •    It is imperative that OEMs, like GM, invest the additional resources necessary to protect and grow our political capital to keep up with this growing threat.


Spring Newsletter
April 20, 2023
EV Tax Credits

The IRS updated guidelines for the consumer EV tax credit. Learn more by reading our Yammer post here.



Spring Newsletter
April 20, 2023

STEP 1: Look up your legislators with the GM Engage Find Your Legislator tool.

STEP 2: Visit your legislator’s website to sign up for email alerts and newsletters – and follow them on social media.

STEP 3: Attend town halls and meetings with the legislator so that you can stay up to date on where they stand on the issues, particularly issues important to you and GM.