With President-elect Donald Trump set to assume office in a few days, electric vehicle makers are getting increasingly apprehensive about their future. Unlike President Biden, Trump is staunchly opposed to climate action and has vowed to eliminate the $7,500 federal tax subsidy that has facilitated tens of thousands of EV purchases over the past half-decade.
Although some pundits say that a second Trump administration may not be as harmful to the green transition as many fear, uncertainty about policy changes has clouded the auto industry’s forecasts for 2025. After suffering several months of low demand and depressed sales, many automakers are worried that an anti-green transition administration could do even more damage to America’s fledgling electric vehicle sector.
Even the news that electric vehicle demand is poised to rise in 2025 has been dampened by uncertainty about President Trump’s EV-related policy decisions. S&P Mobility Global predicts that global electric vehicle sales will hit 15.1 million this year, representing a 30% increase from 2024. Battery electric vehicles (BEVs) will reportedly account for 16.7% of the light-duty vehicle market.
Unfortunately, these predictions may be void if President Trump follows through with his promises to rescind all funds dedicated to climate action. Even though Tesla CEO Elon Musk threw his weight behind Trump’s second presidential bid and spent over $100 million on his campaign, the President-elect could still enact policies that ultimately harm EV makers in the U.S. A recent S&P Global Mobility report indicates that the incoming administration could make major policy shifts that affect EVs directly or indirectly through retaliatory tariffs.
S&P Global Mobility associate director of auto intelligence Stephanie Brinley says with so much uncertainty ‘in the air,’ now isn’t the best time to go all-in on electric cars. If the Trump administration eliminates the federal incentive for EV purchases, significantly fewer people will be able to afford electric vehicle ownership. Outside of the affluent and early adopter markets, nearly every other driver with an electric vehicle wouldn’t have purchased an EV if they didn’t have access to the subsidy.
Automakers also benefitted from the subsidy as it allowed their fledgling electric vehicle divisions to remain profitable. Without the incentive, most automakers will suffer significant EV-related losses. Carmakers like Ford have already reported taking heavy losses for every EV sold off its lot.
President-elect Donald Trump’s promise to levy tariffs on other countries could have a detrimental effect on the auto industry. Retaliatory tariffs from its trade partners could increase the cost of raw material imports and make electric cars even more expensive than they already are.
It remains to be seen how startups like ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) will navigate this fluid regulatory environment in order to grow their footprint within the industry and wrest some market share from bigger EV makers like Tesla.
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