How a second Trump presidency could impact electric vehicles and clean energy policies

The possibility of Donald Trump securing a second term as President of the United States raises significant questions about the future of electric vehicles (EVs) and clean energy in the US. 

While Trump’s administration was known for its controversial stance on environmental policies and clean energy, his potential return to office could have major implications for the EV industry and broader climate initiatives. 

Here’s how a Trump presidency might impact the EV sector and related policies.

Potential rollback of the Inflation Reduction Act’s support for EVs

One of the most immediate concerns for the EV industry is Trump’s position on the Inflation Reduction Act of 2022 (IRA). 

The IRA, which allocated $369 billion towards clean energy initiatives, has been pivotal in driving investment in EV projects. 

Since its enactment, the IRA has catalyzed approximately $77.6 billion in EV-related investments, according to Manufacturing Dive.

Trump has publicly committed to freezing grants and subsidies linked to the IRA. 

His proposal to impose a “moratorium on all new spending grants and giveaways” includes the $7,500 tax credit for EVs, which has played a crucial role in incentivizing consumer adoption of electric cars. 

As reported by the Treasury Department, EV buyers have collectively saved $600 million since the beginning of the year due to these credits, with average savings of around $6,900 per vehicle. 

Eliminating these incentives could significantly slow the adoption rate of EVs, potentially hindering progress towards climate goals and affecting major automakers like General Motors, Ford, and Tesla.

Changes in regulatory landscape for EVs and emissions

Trump’s skepticism towards environmental regulations extends to the Environmental Protection Agency’s (EPA) new rules on tailpipe emissions. 

The EPA’s standards are designed to reduce carbon emissions by promoting higher sales of electric and plug-in hybrid vehicles. Under the proposed regulations, which aim for 56% of new vehicle sales to be electric by 2032, the auto industry is expected to make substantial shifts towards greener technology.

Trump’s opposition to these regulations includes a promise to dismantle the EPA’s rules, which he describes as an “EV mandate” that unfairly targets gas-powered vehicles. 

While both unions and automakers have generally supported these standards, Trump’s pledge to repeal them could undermine efforts to boost EV sales and reduce emissions. 

His rhetoric suggests a return to a more lenient regulatory environment for traditional vehicles, which could lead to increased emissions and slower progress in combating climate change.

Chinese automakers and US production

In contrast to his environmental policies, Trump’s stance on international trade and Chinese automakers presents another facet of his potential impact on the EV industry. 

During his campaign, Trump has advocated for building American factories for Chinese carmakers or imposing tariffs as high as 200% on vehicles exported from China. 

His rhetoric suggests a push to shift production from Mexico to the US, which could affect ongoing and planned projects by companies like Tesla and BYD.

Tesla’s proposed factory in Mexico, announced earlier this year with a planned $15 billion investment, could face delays or alterations depending on the outcome of Trump’s trade policies. 

As the Biden administration prepares to increase tariffs on China-made EVs, Trump’s trade approach could create additional uncertainties for the global supply chain and investment plans in the EV sector.

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