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How will a second Donald Trump presidency shape the future of electric cars in the US?
EVs have unfortunately become highly politicized, making them vulnerable to an administration change. Trump has energized his base with anti-EV rhetoric, vowing at this year's Republican National Convention to "end the electric vehicle mandate on day one." But he's also said he's "all for electric cars" as long as hybrid and gas-powered options remain, and cozied up to Tesla CEO Elon Musk. (Tesla shares jumped by 14% after Trump's win.)
At this point, we're not sure what Trump's personal beliefs are on electric vehicles, and whether he has enough conviction to follow through on his threats. Alternatively, Musk's rise to political prominence after a rather frosty relationship with the Biden administration could reinvigorate the national conversation around EVs, boosting adoption whether Trump likes it or not.
Even without legislative support, the EV cat is already out of the bag, with a strong base of suburban drivers who love them. Consumers know they are more fun to drive with their fast acceleration and incredible technology. That's not changing. Automakers have already made multi-million dollar investments in factories and product launches, which are required to compete globally, particularly in Europe, where EV adoption is triple that of the US.
Trump may struggle to undo the "electric vehicle mandate" because there is no such thing. He may be referring to emissions targets for automakers, which do not ban gas-powered car sales. Automakers can hit the targets with a variety of low- and zero-emission technologies. An emerging option are so-called "EREVs," or more advanced hybrids that Ram, Hyundai, and Scout are launching in the next two years.
The Biden administration already softened the emissions targets this year, and moved them back to 2030, Reuters reports. By that time, battery technology could be far improved with no need for American drivers to compromise on range or cost.
Trump could roll back emissions standards further, and has vowed to strike down state-wide efforts to ban gas car sales after 2035, Reuters reports. But states are already pumping the brakes there. Colorado opted instead to target 82% electric cars by 2032 rather than 100%.
The Biden administration has already dispersed billions of dollars for charging infrastructure, battery research, and manufacturing as part of a broader push to create 800,000 manufacturing jobs. Trump could cut off further investments, but the seeds are already planted. Plus, the majority of EV manufacturing plants funded with help from the Biden administration are located in red states, Bloomberg reports. Those jobs are helping Trump's base.
Trump's main target will likely be repealing the $7,500 federal tax credit, which is written to go until 2032. Tens of thousands of Americans are using it to save money at dealerships and indirectly through leases. But Vice President-elect JD Vance hopes to replace it sooner with a gas-powered car credit. Musk says repealing it will be hurt Tesla slightly in the short term, but "devastate" its competitors, but I'm not convinced.
Repealing the tax credit could indirectly lower the price of EVs by making it easier for manufacturers to source low-cost batteries from China, which would disqualify their vehicles for the tax credit. Tesla has spent the better part of 2024 trying to reclaim its eligibility on the EV tax credit by swapping out Chinese-made batteries and battery components. Repealing the tax credit could loosen scrutiny on automakers' Chinese sourcing practices, lower the vehicle cost, and put more zero-emission vehicles on the road.
But is that worth abandoning a broader mission to compete with China on battery production and technology, which is crucial for America's future energy independence? China dominates the global battery industry, with gigantic manufacturing facilities and extensive battery minerals mining abroad, The Economist reports. America is far behind in this area. Repealing policy support for these areas will not stop China from getting further ahead.
Musk has made it clear that China is Tesla's biggest competition, Business Insider reports. This is not just for American buyers, but also Europeans who are snapping up cheap, Chinese-made EVs you can't buy in America. Ford cited the inability to compete with China as a reason for delaying its EV plans, despite CEO Jim Farley saying he loves them.
Trump may "compete" in his own way by hiking import fees. The Biden administration already increased tariffs on Chinese-made vehicles and lithium-ion batteries up to 100% and 25%, respectively, Utility Dive reports. Trump has not proposed any specific, new EV-related tariffs, only fees that would affect all imported cars and auto components (gas and electric), NBC reports. This is unlikely to happen given the disastrous effects it would have on the US auto industry.