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

Donald Trump talked a lot about electric vehicles on the campaign trail. “We will end the electric vehicle mandate from day one,” he said, adding that electric vehicles “don’t work.” And he said EVs benefit China and Mexico while harming American auto workers.

But he also works closely with Elon Musk, who runs America’s largest EV company. And he will continue to whisper in Musk’s ear about important policy issues moving forward, even promising to appoint the mercurial billionaire to a role in his administration.

Now that he’s the next president, what will he actually do to influence the auto industry and its tenuous transition to electric vehicles?

First, he said he would “withdraw all unspent funds” from President Joe Biden’s inflation reduction law, which includes many of the administration’s efforts to encourage production of electric vehicles in the United States. Trump will likely eliminate all incentives, from EV tax credits to incentives for battery factories and mining.

This could be an unpopular move because tax credits have been shown to work. Biden administration claims tax credit was successful and saved car buyers $1 billion in 2024 alone. Credit can now be applied at the time of sale. That means shoppers can get a discount when purchasing an EV directly from a dealer. And EV sales continue to grow, growing 11% year-over-year in the third quarter of 2024. According to Cox Automotive.

Eliminating these tax credits and incentives would make EVs more expensive for many Americans, leading to fewer vehicles being sold. Manufacturers will need to adjust their plans to account for a less lenient tax environment. Any factory that has not yet started construction is at risk.

However, making a car is expensive and the development cycle lasts several years. Automakers will lobby hard for regulatory certainty. It’s entirely unclear whether Trump will pay attention.

“Depending on how much you do. [the individual tax credit] Sam Fiorani, Vice President of Global Vehicle Forecasting at AutoForecast Solutions, said: said car news. “A lot of the demand for EVs right now is driven by these incentives, and those incentives feed into manufacturers.”

President Trump could also end the National Electric Vehicle Infrastructure (NEVI) program to install more EV chargers. but, At least 14% of NEVI funds went directly to Tesla.is the largest EV charging provider in the United States. It’s unclear whether Trump will repeal the program that benefits his new best friend. But Musk has said disparaging things about NEVI, so it’s definitely a possibility.

Some Tesla investors say the new Trump administration will likely have a negative impact on the auto industry, but it could end up being good for Musk, who famously spent more than $119 million to support Trump’s campaign.

“Tesla has unparalleled scale and scope in the EV industry, and this dynamism could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment,” said Wedbush analyst Dan Ives. . “It will continue to push out the cheaper Chinese EV players (BYD, Nio, etc.) flooding the U.S. market in the coming years.”

Trump is likely to try to roll back or weaken the Biden administration’s new tailpipe emissions standards that aim to cut greenhouse gas emissions in half by 2032. This is likely what he is talking about when opposing the “EV mandate.” Republicans incorrectly portrayed the new standards as a ban on gasoline-powered cars. For automakers to meet these stringent regulations, electric vehicles must account for more than half of new vehicle sales.

If that happens, automakers are expected to put the brakes on EV production. This will make Detroit’s Big Three (Ford, General Motors, and Stellantis) less competitive globally. Because the rest of the world continues to innovate and produce more EVs. This could also open the door for foreign automakers to enter the market and dominate. Tariffs could prevent countries like China from flooding the U.S. with cheap EVs, but that could be short-lived if China continues to make cheaper and more affordable EVs.

Trump’s plan to impose tariffs on a variety of imports, including foreign cars, could make it more expensive to buy many cars. In the German stock market, stock prices of BMW, Mercedes-Benz, and Porsche all fell on the news of President Trump’s election last Wednesday. Meanwhile, stock prices of the Big 3, including Tesla, soared early in the market.

California’s right under the Clean Air Act to enact stronger emissions standards is also likely to fall into Trump’s crosshairs, just as it did when he was last in office. This could become another nest of lawsuits and counter-lawsuits. Trump will ruin the fight.

Fights over tax credits, emissions standards, federal spending, states’ rights, and more will be a feature of this presidency and its approach to the auto industry, just as they were the last. But this time, EVs are becoming mainstream, and large investments cannot be released haphazardly. Climate change is a looming threat, and EVs are seen as an important tool in the fight against it. There is much more at stake this time.