The U.S. electric vehicle market is largely driven by Democratic policies. There are federal tax credits available to car buyers. Subsidies for battery manufacturing. Cheap financing to build an electric car factory. Subsidy for chargers. Regulations that encourage automakers to sell more vehicles that emit less exhaust gas.
All of this aid, amounting to hundreds of billions of dollars, was given to Donald J. Trump, despite his close relationship with Elon Musk, CEO of electric car maker Tesla. may disappear immediately after taking office.
Mr. Trump and Republicans in Congress have said they plan to eliminate most federal subsidies and reverse emissions regulations for electric cars and trucks, raising concerns about the future of these vehicles and the investment automakers have made in designing and manufacturing them. Billions of dollars are in question.
Still, many auto experts say market forces and technological advances will ultimately drive a long-term transition to electric vehicles, no matter how far Republicans go to reverse President Biden's climate change policies. are.
The price of batteries, the most expensive component of electric cars, is falling rapidly. Many electric cars already have a lower cost of ownership than comparable gasoline models when you factor in fuel and maintenance savings.
Technology is advancing rapidly. Batteries are becoming lighter and smaller, enabling faster charging and longer travel distances. According to research firm Law Motion, more than 12,000 high-voltage public chargers will be added in the U.S. in 2024, an increase of 33% from the previous year.
Automakers have a strong economic interest in promoting electric vehicles, regardless of who is in the White House. You need to get a return on your investment in production facilities. And if it doesn't catch up with this technology, it could be vulnerable to emerging competitors from China that are going all-in on electric vehicles.
“Whatever policy changes the new administration proposes, we will comply with and comply with,” Hyundai Motor America CEO Randy Parker told reporters during a conference call last week. We will adjust accordingly.”
“Make no mistake about it, we are fully committed to electrification,” he added.
Hyundai recently began production of its popular Ioniq 5 at a new $7.6 billion factory near Savannah, Georgia. The vehicle and its large electric sport-utility vehicle will be the first Korean automaker to qualify for a $7,500 federal tax credit. The factory complex will employ 8,500 people, including Hyundai's suppliers, once it reaches production capacity, and is one of the largest examples of jobs and investment created by electric vehicles.
If Republicans repealed the Anti-Inflation Act, which includes $7,500 in loans and subsidies for battery manufacturing, charger installation, and electricity costs, cars with batteries, which generally cost more up front than comparable gas-powered cars, would There is little doubt that sales will take a hit. School bus.
Mike Johnson, a Republican congressman from Louisiana, a major oil and gas producer, repeated that threat after being re-elected this month as speaker of the House. “We're going to protect jobs at automakers, and we're going to do that by ending the ridiculous EV mandate,” he said.
Analysts say sales of electric cars in Germany fell 27% last year after the country's government cut incentives for car buyers.
“If the incentives go away, it's definitely going to impact sales,” said Stephanie Valdez Streety, director of industry insights at Cox Automotive.
Cox said electric cars sold for an average of $55,105 in the U.S. in 2024, compared to $48,165 for gas-powered cars.
However, the price difference is half of what it was two years ago. Several more affordable models have arrived this year, and many analysts expect electric cars to cost the same or less than internal combustion engine cars by the end of 2020.
General Motors sells the Chevrolet Equinox electric car for about $35,000 and plans to bring back the Chevrolet Volt at a lower price this year. Later this year, Honda plans to begin producing electric vehicles in Ohio. The Japanese company hasn't announced pricing, but it's known for its affordable vehicles.
Tesla has said it will start selling low-cost cars by the middle of this year, but has provided few details. Later this year, Volvo will begin selling a version of the EX30 that will cost less than $37,000.
“The cost of EVs will be lower than internal combustion engine vehicles,” said Kurt Kelty, GM's vice president of batteries. “That's what we're aiming for.”
Many states, including Colorado, New York, and Washington, continue to offer subsidies for electric vehicles. California Governor Gavin Newsom has said the state will reinstate the incentives if the federal tax credit is repealed.
Sales of electric cars soared in China, causing prices to fall to the same level or lower than gasoline-powered cars, a foreshadowing of what could eventually happen in the United States. Half of new cars sold in China are electric or plug-in hybrids, compared to about 10% in the United States.
With price no longer a barrier, Chinese car buyers focused on the benefits of electric cars, including software features that are difficult to include in gas-powered cars, said Hagen Heubach, head of automotive operations at German software company SAP. . “Markets can turn around very quickly,” he said.
The success and global expansion of Chinese automakers has also put pressure on U.S. and European automakers to continue developing technology or risk being overwhelmed.
BYD, based in Shenzhen, China, produced 4.3 million electric and plug-in hybrid vehicles last year, joining the big league of the global auto industry. BYD does not manufacture vehicles that run solely on fossil fuels.
Most auto executives believe electric vehicles will eventually become mainstream, but opinions differ on when that will happen. In the U.S., sales of electric cars rose 8% last year, Cox said, but sales of cars that run solely on fossil fuels fell 2%.
Sales of plug-in hybrids, which can travel about 40 miles on battery power before the gas engine starts, jumped 19%. This suggests that many consumers are interested in driving electric cars, even if they are not ready to give up gasoline.
In any case, a small number of cars qualify for a federal tax credit for the purchaser. The Inflation Control Act limited the tax credit to vehicles with a certain percentage of parts manufactured in the United States or its trading allies. Requirements become stricter each year and some vehicles are excluded from the list. As of January 1, some models are no longer eligible, including the Volkswagen ID.4 and Ford Mustang Mach-E.
Republicans are also expected to seek a provision that would allow leasing companies to collect a $7,500 credit on all battery-powered vehicles, regardless of where they were manufactured. Leasing companies typically pass the savings on to their customers.
A study published in October by Stanford University professors found that eliminating the credit would reduce electric car sales by more than 300,000 units a year, equivalent to about three months of sales in 2024. That's what it means. University of Chicago. University of California, Berkeley. and Duke University.
However, the researchers also noted that many buyers would have bought an electric car even without the incentives. Some drivers are willing to pay more for battery-powered cars because they accelerate faster and are quieter. You can charge your car at home at a lower cost than refueling at a gas station. No oil changes or other regular maintenance is required.
Of course, many car buyers may be reluctant to buy a car for years.
A recent survey by consulting firm Deloitte found that nearly half of Americans were concerned that their electric vehicles would not be able to travel far enough between charges. However, research shows that most people rarely travel more than 90 miles from home, and most electric models can comfortably travel 200 to 300 miles without stopping.
With many Republicans supporting new factories in states like Tennessee, Kentucky, and South Carolina, it's no surprise that Republicans would eliminate all Democratic electric vehicle policies. Republicans will be stealing jobs in their own home turf.
Mr. Trump's inner circle includes Mr. Musk, whose electric car company Tesla accounts for nearly half of all electric cars sold in the United States and benefits from the credit. Mr. Musk supports eliminating electric vehicle subsidies, but it is unclear how he will use his influence after Mr. Trump becomes president. Tesla did not respond to a request for comment.
Caroline Leavitt, the president-elect's transition spokeswoman, said in an email that Trump's campaign promises included “stopping attacks on gas-powered vehicles.” She suggested he take a more balanced approach. “President Trump will support the auto industry and give space to both gasoline and electric vehicles,” she said.
Still, electric vehicle advocates are concerned about the disruption that will ensue. Albert Gore III, executive director of the Zero Emission Transportation Association and son of a former Democratic vice president, said the slowdown in sales could hurt efforts to develop sources of lithium and other battery materials in the United States. He said that there is a sex. Currently, China controls that supply chain.
Gore said mining companies have been able to “raise capital markets and invest in U.S. capacity based on solid demand commitments from U.S. automakers.” “That will be the most noticeable impact.”
Environmentalists said even a slight slowdown in electric vehicle sales could have a serious negative impact on efforts to reduce greenhouse gas emissions from burning fossil fuels.
“Right now we're probably not moving fast enough,” said John Borsell, president of CalStart, a nonprofit group supported by businesses and governments that promotes clean transportation. “So any effort to slow things down or delay things is going to have a negative impact for decades, if not centuries, to come.”
