The Republican nominee has pledged to end some of Biden's accomplishments on "day one"
Former president Donald Trump isn’t one to mince words. The brash Republican nominee for president has made it clear he’s not a fan of electric vehicles or clean energy and promised to “drill, baby, drill” for more oil. But what would a second Trump administration mean for the EV industry?
The most obvious target of a potential President Trump 2.0 would be the Inflation Reduction Act of 2022 (IRA), which provides $369 billion in tax breaks and subsidies for clean energy, including EV projects. The bill helped push companies to invest $124.7 billion in clean energy projects since it was passed in August 2022, including some $77.6 billion in EV projects, according to Manufacturing Dive.
But Trump has promised to put a freeze on the IRA’s grants and subsidies. In May, Trump said he would “impose an immediate moratorium on all new spending grants and giveaways under the Joe Biden mammoth socialist bills like the so-called Inflation Reduction Act,” according to CNBC.
According to Columbia Threadneedle Investments, which manages $652 billion in assets, the biggest provisions at risk of being cut by a Trump presidency are those benefitting EVs, wind power, and clean hydrogen. That includes the $7,500 tax credit for EVs, which has helped persuade consumers to make the switch to electric. As of May, EV buyers have saved $600 million since January on buying new electric cars, with consumers saving an average of $6,900, according to the Treasury Department.
Doing away with the tax credit for buyers would slow the U.S.’s adoption of EVs, which are necessary to achieve the climate goals set by the current administration. It would also hurt major automakers including General Motors $GM, Ford $F Motor, and Tesla $TSLA, although the latter doesn’t seem to mind.
Tesla CEO Elon Musk — who has endorsed Trump and helped launch a pro-Trump Super PAC — on Tuesday said doing away with the IRA tax credits “probably actually helps Tesla” in the long term because its rivals — who control much less of the market — would be hindered.
“The tax incentive is important,” said Aaron Viles, the senior director of campaigns for the Electrification Coalition, noting that most early adopters — the people most excited about the technology — have already gotten their cars. “Now it’s a matter of mass-market appeal” and getting to consumers who are worried about high prices,” he added.
Trump’s running mate, Ohio Sen. J.D. Vance, has submitted legislation to remove the EV tax credit and replace it with a similar credit for gas-powered cars. That’s despite, as Viles points out, Ohio’s booming clean energy sector and GM’s Ultium Cells operating a factory in Lordstown.
Along with pulling support for EV tax credits, Trump has floated doing away with an IRA program that provides funding for electric charging infrastructure, which is crucial for adoption. Progress on building EV charging stations has been slow, but at least 23 states have started handing out funding to companies like ChargePoint, which has been selected for awards at more than 125 sites.
The former president has also taken aim at the Environmental Protection Agency’s (EPA) new rules on tailpipe emissions, which are projected to avoid more than seven billion tons of carbon emissions over the next three decades. The EPA said that the auto industry could meet its requirements if 56% of new vehicle sales are electric and 13% are plug-in hybrids, by 2032. The National Highway Transportation Administration enacted similar emission standards in June.
Although both unions and automakers, including EV makers Rivian $RIVN and Tesla, have supported the EPA’s rule — which was initially proposed with even stricter regulations — Trump has promised to scrap it, repeating an oil-lobby claim that it is an EV “mandate” that bans gas-powered cars. Viles, and other advocates, say the rules will “certainly” lead to more EV sales, but that there’s no requirement that consumers purchase them.
“And I will end the electric vehicle mandate on day one,” Trump said during his speech at the Republican National Convention (RNC) last week. “Thereby saving the U.S. auto industry from complete obliteration, which is happening right now and saving U.S. customers thousands and thousands of dollars per car.”
Despite the Republican nominees’ staunch opposition to China — Vance has called China the “biggest threat” to the U.S., while Trump’s White House took at least 210 public actions against the country — Trump has called for Beijing’s automakers to build American factories.
“Right now as we speak, large factories just are being built across the border in Mexico,” by China to sell cars in the U.S., Trump said at the RNC. “We don’t mind it happening but plants will be built in the United States and our people are going to man those plants,” he added.
If those plants aren’t built in the U.S., Trump said he would slap tariffs as high as 200% on each car to block exports. Currently, the only Chinese cars available in the U.S. are sold by American companies or Volvo, the Swedish carmaker owned by Geely. The Biden administration is poised to quadruple tariffs on China-made EVs next month.
Although about 20 Chinese companies sell cars in Mexico, none of them have started work on a factory. China’s biggest EV maker, BYD, told Bloomberg News last month that the company is in final negotiations for the location of a Mexican factory, which is expected to create about 10,000 jobs.
If Trump does go through with his plans, it could put an end to Tesla’s goal of starting production in Mexico. Musk said that work on Tesla’s planned factory in Mexico — which was first announced in February 2023 — is on pause because of Trump’s promises. Tesla and its suppliers aim to invest $15 billion into the factory by the end of 2025 and have secured $135 million in government incentives.
“We need to see where things play out politically,” Musk said.
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