What now?
If you have a vested interest in all the progress America has been making to forge a cleaner energy future, including with its automotive industry, the news that President Donald Trump will return to the White House is probably not what you wanted today. As we've covered exhaustively over the past few months, much of the electric vehicle transition in the world's second-largest car market was driven by new policies from the Biden administration. Those included EV charger growth and tax incentives to buy electric cars and build them stateside. Trump has vowed to target those policies if he was reelected, which he was last night in a possible landslide. So "What now?" is a pretty valid question for the auto industry, the charging industry, policymakers and the planet as a whole.
On today's edition of Critical Materials, we begin the process of figuring out what that all means.
Without a doubt, you're going to read a lot of reactionary, knee-jerk takes out there today and in the coming days. My goal as the Editor-in-Chief of InsideEVs is to give you something better: something more thoughtful, more thorough and more grounded in reality than what our worst fears may tell us. That's always been the case here, and this team will make sure it continues to be so. Let's dig in.
30%: 'A New Round Of Uncertainty'
If you ask any automotive industry chief executive what they want most for the holidays, besides copious bonuses and returns for shareholders, they'd probably say "regulatory certainty." And that is very, very up in the air right now.
The Biden administration set a goal of 50% all-electric car sales by 2030. That was backed up by aggressive new emissions and fuel economy rules meant to gradually phase out new internal combustion sales. It was a huge reversal of the first Trump administration's policies, which actually rolled back emissions and fuel economy rules.
Basically, since carmaking is a long-term, capital-intensive business, automakers spend years planning their businesses around ways to meet those regulations; if they change every four years, it creates a tremendous deal of uncertainty around what products to build, what people will want and how to even sell them. Here are some highlights from Automotive News:
“A Trump victory leads to a lot of immediate volatility in the transportation policy space,” said John Miller, who covers sustainability policy for TD Cowen’s Washington Research Group.
With the House majority still in the balance, it’s unclear whether significant changes could come to the Inflation Reduction Act. Trump, without congressional control, still can revisit the act’s implementation guidelines, including those for the individual tax credit, commercial vehicle tax credit and used clean vehicle tax credit.
“Depending on how much [the individual tax credit] would be changed, it could be very detrimental to the North American automotive industry,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “A lot of the demand for EVs currently is driven by that incentive, and that incentive feeds the manufacturers.”
The new Trump administration may also seek to delay light-vehicle regulations set to come into effect after the 2028 model year, which would also delay regulations for post-2032 model years — as well as eliminate California’s ability to set its own standards. Karoline Leavitt, the Trump campaign’s national press secretary, said this year that California’s waiver to set its own greenhouse gas emissions rules would be “immediately revoked” upon Trump taking office.
As that story notes, a large coalition of automakers has already agreed to meet California's tougher climate standards. But Trump could target California's ability to set those standards as well. Like I said, a lot is up in the air today.
60%: Elon Musk's Big Bet Pays Off
In a career marked by taking big and improbable bets on things everyone else had written off—online banking, electric cars, space travel and more—Tesla CEO Elon Musk's biggest bet yet paid off in a massive way last night.
Nobody backed Trump harder than Musk. From effectively funding and running Trump's ground game in Pennsylvania to turning the pro-Trump volume to 11 on the social media platform formerly known as Twitter, Musk placed his eggs in the Make America Great Again basket, and it looks like he's gonna come out on top. He may even make good on his claim to advise, or even run, some kind of government agency aimed at dramatically slashing federal spending.
Does this mean that EVs have an ally in the White House? Or will Musk just be looking out for Musk, which to me means cutting regulations around space travel and cementing new ones for autonomous vehicles? And will the Trump-Musk partnership continue to hold steady?
What we do know is that it's already paying off big for Tesla. From CNN:
Early Wednesday, investors were already betting that Trump’s win will also be a win for Musk’s major public holding, Tesla (TSLA), sending shares of his electric vehicle maker up 12% in premarket trading. That lifted the value of the shares of Tesla that Musk owns outright by more than $12 billion, which works out to a better than a 10,000% return on the $119 million he donated to Trump. But there are risks for Tesla, even from Trump’s victory.
Much of Musk’s massive net worth can be traced to the government support his companies, such as Tesla and SpaceX, have received over the years. Even if Vice President Kamala Harris had won, much of that money would have continued to flow. But even if some of the government support for electric vehicles is now trimmed or cut off, as is likely with Trump’s victory, Musk’s wealth will remain firmly intact. In fact, Tesla could benefit if government support for EVs ends.
[...] But Musk has said he’s not worried about the end of the tax credit, as Tesla sees it as a boon to legacy automakers’ efforts to move into the EV market and provide more competition.
“Take away the subsidies. It will only help Tesla,” Musk posted on X in July.
Thanks to increased competition, Tesla’s global sales sank 2% in the first nine months of this year compared to last year. Sales and profit managed to improve in the third quarter, but it was the first time the company had ever seen such a drop in its history.
That's one plausible outcome here. Take away the subsidies driving EV manufacturing and development for General Motors, Polestar, BMW and countless others, and they retreat into internal combustion and Tesla gets ahead on EVs.
That, of course, depends on Musk actually wanting Tesla to focus on batteries and electrification and not just autonomy, something we've had considerable doubts about lately.
90%: Tariffs, Tariffs, Tariffs?
It's not just environmental regulations that are at stake here. Trump also ran with big promises of tariffs on all kinds of foreign-made goods, including cars. Just the other day, he threatened 25% to 75% tariffs on Mexican-made products—including cars—if the country didn't assist in reducing migration into the United States. Earlier, he promised to set a 100% duty on imported cars and trucks to boost American manufacturing, and then doubled that to 200% on the campaign trail.
It's not like the Biden administration, and past ones, haven't done this. Biden kept Trump's tariffs on Chinese-made cars and then boosted them to 100% for Chinese-made EVs. And the Chicken Tax has helped keep America's lucrative domestic truck industry afloat for decades. But implementing stiff new tariffs on a country like Mexico, which exported 2.5 million cars to the U.S. in 2023, would create new levels of uncertainty. It's not like auto factories can be ramped up overnight, and forcing so many cars to be built stateside would no doubt increase their costs.
Fears of anti-Mexico tariffs already put Honda on notice before the election was decided. Overnight, European auto stocks took a big hit as well, fearing the same. And that's on top of the disastrous year they've already been enduring. Via Reuters:
BMW CEO Oliver Zipse said potential import tariffs under the U.S. presidency of Donald Trump may benefit the automaker, even as shares in the German premium carmaker and its rivals fell due to concerns the sector would be hurt by escalating trade disputes.
Fears over import tariffs, which Trump has threatened on goods from the European Union, caused shares in BMW, Volkswagen, Mercedes-Benz and Porsche to fall 4.6 percent to 6.4 percent on Nov. 6.
Zipse sought to allay fears after presenting bleak third-quarter results, pointing to the company’s strong U.S. footprint that includes its largest plant worldwide.
The U.S. market accounted for 12.9 percent of the 3.1 million in German passenger car exports in 2023, making it the single-biggest export market for Germany’s carmakers. The U.S. is increasingly lucrative for German automakers because of robust demand for large SUVs and a slower shift to EVs than in Europe, allowing them to sell more of their higher-margin combustion-engine models.
Having covered the auto industry during the first Trump administration, I can tell you this: he says a lot of things. What he actually does is far more difficult to predict, but the mere act of saying it creates a unique brand of uncertainty that a lot of people are scrambling to figure out today.
100%: You Tell Me. What Now?
I hope to have more to say on this later, but here is what I do know. The auto industry has always chased two things: efficiency and performance. EVs represent the next evolution of both.
A U.S. government that's less inclined to throw money at the electric transition won't stop it, but it may well slow it down when other players—China, namely—show no signs of slowing down. Rolling back our clean energy goals will have profound effects on our climate, however. And hundreds of thousands of planned manufacturing jobs are now at stake if the policies of the Inflation Reduction Act get repealed.
So where does it all go from here? That's what we intend to find out next.
Contact the author: patrick.george@insideevs.com
