If President Trump has his way, the auto industry's transition to electric vehicles will soon be reversed. He would erase tax credits for electric vehicle purchases, federal subsidies for chargers, and grants and loans to help build battery factories back down the assembly line.
The executive order issued by Mr. Trump on Inauguration Day builds on former President Joseph R. It amounts to a rejected repudiation of the program's central character.
The order also presents challenges for automakers that have invested billions of dollars in electric vehicles as the Biden administration encouraged them to do so. However, some orders appear to circumvent Congressional or federal rulemaking procedures.
Although framed as a way to revive the American auto industry, automakers could fall behind as they scale back their electric vehicle programs while Asian and European automakers continue to perfect the technology. There is. Already, 50% of China's car sales are electric or plug-in hybrid, and Chinese automakers like BYD are selling more cars around the world than existing car companies, including American manufacturers. You're taking customers away.
The executive order, titled “Unleash America's Energy,” was signed by the president on Monday and is part of Biden's effort to force federal agencies to push the arts industry toward vehicles with no tailpipe emissions. Directs immediate suspension of payments of funds appropriated by Congress. Among other things, this funding helped the state install fast chargers along major highways.
Biden's main climate law, the Inflation Reduction Act, also provided tax credits of up to $7,500 for buyers of new electric vehicles and $4,000 for buyers of used models. The credit effectively made the cost of buying an electric car roughly equivalent to the price of a car with a gasoline or diesel engine.
Trump also called for 50% of new vehicles sold in 2030 to be fully electric, plug-in hybrid, or vehicles running on hydrogen fuel cells. rescinded ambitious Biden executive orders;
And Trump said his administration would seek to revoke California's authority to establish air quality standards that are stricter than federal regulations. It will have wide-ranging effects. California aims to make 100% of new car sales electric by 2035, and some of its standards have been copied by at least 17 states.
“The impact will be significant,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity firm that invests in sustainable transportation.
If demand for electric vehicles flags up, as other countries like Germany have cut incentives, automakers could be left with costly, unused electric vehicle and battery factories. I mentioned that there is.
“Federal funding for EV and battery manufacturing is difficult to access and increases the risk of stranded capital for manufacturing projects already underway,” Natarajan said in an email.
Representatives of the fossil fuel industry celebrated the president's action, but environmentalists said it was a serious setback to efforts to reduce greenhouse gas emissions and reduce urban air pollution caused by automobiles. I lamented what had happened.
“This is a new day for American energy,” Mike Somers, president of the American Petroleum Institute, said in a statement. Not restricted. ”
“We've seen a lot of changes,” said Katherine Garcia, a transportation expert with the Sierra Club. We will fight with him at every turn of the road. ”
But the final effect may not be as far-reaching as the forceful language in Trump's executive order.
Funding to encourage the sale and production of electric vehicles was written into the law that the president could not unilaterally repeal. Trump also cannot undo the rules that the Treasury Department and other government agencies have established to determine how money is distributed with the stroke of a pen. Any attempt to short-circuit the arduous process of proposing new regulations, which involves soliciting comments from the public, will almost certainly invite credible legal challenges.
The Department of Energy has agreed to lend billions of dollars to automakers like Rivian. Rivian will receive $6 billion to produce electric sport utility vehicles at a factory near Atlanta. The loan agreement, finalized in the waning days of the Biden administration, is a binding contract.
Much of the money goes to congressional districts in states like Georgia, Ohio, South Carolina and Tennessee, where Republicans dominate local politics. Their representatives may be hesitant to repeal laws that brought jobs and investment to the district. That's a challenge for Republican leaders vying for the House and Senate minorities.
Ultimately, individuals and families decide which car to purchase. Electric vehicles and plug-in hybrids are gaining market share because they offer rapid acceleration and reduced fuel costs, as well as subsidies. Cars running on fossil fuels are losing market share, but that could change if financial incentives are removed from battery-powered cars and trucks.
Sudden changes in political direction are confusing for automakers. They may welcome promises by the president to roll back emissions and air quality standards that force manufacturers to sell more electric cars than they would like. But eliminating federal aid can disrupt financial planning at a time when most are struggling to earn or increase profits.
The area regarding electric vehicle policy was exposed to an environment of uncertainty and the president's promise to impose a 25% tariff on goods from Canada and Mexico.
The U.S. auto industry “would be crushed by tariffs on assembled vehicles or parts at this level,” Karl Weinberg, chief economist at High Frequency Economics, said in a note to clients on Tuesday.
Some automakers appeared to applaud the president's actions, while others were noncommittal.
“President Trump has a clear focus on policies that support America's robust and competitive manufacturing base,” Stellantis, which owns Dodge, Jeep, Ram, Chrysler and other brands, said in a statement. said in a statement.
General Motors Chief Executive Officer Mary T. Barra congratulated Mr. Trump with an X on Monday, saying the company “looks forward to working together on the shared goals of a strong American auto industry.” Ta.
There are signs that Elon Musk, Tesla's chief executive and head of what Trump calls the government's Office of Efficiency, is using his influence to blunt the attack on electric cars. there is no. Tesla sells just under half of the electric cars in the United States, and almost all of its vehicles qualify for a $7,500 tax credit.
Four of the 16 cars and trucks that can be purchased with the help of that tax credit will be made by Tesla. GM is the only automaker with five more eligible models. No other company has more than one qualifying vehicle.
Musk has previously said the government should remove all subsidies and that Tesla will suffer more than other automakers. However, analysts note that Tesla's sales and profits would be hit hard if Trump successfully repeals or cuts the electric vehicle tax credit, California's clean air exemption and other such policies. I am.
Tesla did not respond to a request for comment.
Appearing before Trump supporters in Washington on Monday, Musk, who is also SpaceX's chief executive, praised the president for his commitment to sending astronauts to Mars. “Can you imagine how amazing it would be to have an astronaut plant a flag on another planet for the first time?” Musk said. He didn't mention the car.
