What does Trump’s election mean for EVs, Tesla, and Elon Musk?

During the campaign, Donald Trump said a lot about electric cars. He said he would “end the electric vehicle mandate on day one,” that EVs are “not working,” and that they benefit China and Mexico while hurting American auto workers.

But he has also aligned himself closely with Elon Musk, who runs the largest EV company in the US. And it’s possible that Musk will continue to whisper in his ear on important policy issues moving forward, even promising to appoint a billionaire to take part in his administration.

Now that he is the president-elect, what will he really do that will affect the auto industry and its radical shift to electric vehicles?

First, he said he would “repeal all unused funds” from President Joe Biden’s Appropriation Act, which includes many of the administration’s efforts to boost EV production in the US. Trump is likely to kill these incentives, everything from EV tax credits to incentives for battery factories and mines.

It may be an unpopular move, as tax credits have been shown to work. The Biden administration says the tax credits have been successful, saving auto buyers $1 billion in 2024 alone. The credit can now be used at the point of sale, meaning buyers can receive a discount on their EV purchase directly from dealers. And EV sales continue to grow, growing 11 percent year over year through the third quarter of 2024, according to Cox Automotive.

Eliminating these tax credits and incentives will make EVs more expensive to buy for more Americans, which could result in fewer cars being sold. Manufacturers will have to adjust their plans to account for the less favorable tax situation. Any industry that has not yet exited is at risk.

But making cars is expensive, and development cycles last years. Automakers will be looking hard for regulatory certainty — even if Trump listens is up in the air.

“It depends on how much [the individual tax credit] can be changed, it would be very dangerous for the North American auto industry,” Sam Fiorani, vice president of global automotive forecasting at AutoForecast Solutions, said. Car News. “A lot of demand for EVs right now is driven by that incentive, and that incentive feeds the manufacturers.”

Trump may also kill the National Electric Vehicle Infrastructure (NEVI) program to install more EV chargers. However, at least 14 percent of NEVI’s funds went directly to Tesla, which is the largest EV charging provider in the US. It is unclear whether Trump will fire the program that benefits his new BFF. But Musk talked badly about NEVI, so it’s possible.

Some Tesla investors say that while the new Trump administration may not be in the auto industry, it could end up working for Musk, who, to Trump’s dismay, spent more than $119 million on his campaign.

“Tesla has unparalleled scale and scope in the EV industry and this shift could give Musk and Tesla a clear competitive advantage in the EV funding space,” said Wedbush analyst Dan Ives, “combined with China’s potentially high costs.” continue to drive cheap Chinese EV players (BYD, Nio, etc.) from flooding the US market in the coming years.”

Trump may try to roll back or weaken the Biden administration’s new greenhouse gas emissions standards, which would cut greenhouse gas emissions in half by 2032. This may be what he’s talking about when he argues for “EV authority.” Republicans have falsely touted new standards like the ban on gas-powered cars. EVs will need to account for more than half of new vehicle sales in order for automakers to meet these strict guidelines.

If that happens, expect automakers to hit the brakes on EV production. That will result in Detroit’s Big Three – Ford, General Motors, and Stellantis – becoming less competitive globally, as the rest of the world continues to innovate and produce more EVs. It may also open the way for foreign car manufacturers to come in and capture the market. Tariffs would prevent countries like China from flooding the US with cheap EVs, but that could be temporary if China keeps making cheaper and cheaper EVs.

Trump’s plan to impose tariffs on a variety of imported goods, including foreign cars, could make many cars more expensive to buy. Shares of BMW, Mercedes-Benz, and Porsche all fell on the German stock market on news of Trump’s victory on Wednesday. Meanwhile, stock prices in the Big Three, as well as Tesla, rose sharply in early trading.

California’s right under the Clean Air Act to set stricter emissions standards is likely to fall within Trump’s reach, as it did during his tenure. This could be another rat’s nest of charges and counter-charges. Trump will be spending the fight.

Fighting — over tax bills, emissions standards, federal spending, federal rights, and more — will be a hallmark of this president and his approach to the auto industry, just as it was last year. But this time around, EVs are becoming the norm, and a lot of investment won’t just go away. Climate change is a looming threat, and EVs are seen as an important tool to combat it. In this case, there is just too much at stake.