A second Trump term may affect the electric vehicle market very differently for the big automakers. While Tesla, having already set its scale, profitability, and connection with the US President, will likely benefit from Trump's policies, Rivian and Lucid will struggle to handle the changing political panorama.
Here's a breakdown of what Trump's policies can mean for the EV industry.
Tesla's Stock Rockets on Election Day
Electric car maker Tesla is likely to ride the Trump wave, in part because of its CEO Elon Musk's support for Trump through advertisements in swing states, Electrek reports.
After the landslide victory of Trump against Kamala Harris, Tesla's shares rose by 15% as investors felt that companies with confident management elicit the attention of Musk as one of the triumphant cornermen.
Smaller electric start-ups Rivian and Lucid saw their stock slip 5.3% and 8.3% respectively as investors were fearing Trump's plans for hard-on environment regulations.
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Proposed Rollback by Trump on Environmental Policies
Trump's stance on environmental policies may very well change the face of the EV industry. He has publicly slammed electric vehicles and threatened to dismantle or destroy the Environmental Protection Agency (EPA).
Trump aims to roll back emission standards of automobiles and may also impose heavy customs duties on cars imported into the United States from other countries, including Mexico, China, and Europe. He may charge up to 200% customs duty on certain car imports.
These proposed changes are likely to drive up costs on car companies using international production and, in many cases, would hit Tesla on the massive production ties it has in China.
Impact on EV Incentives and Biden's Climate Initiatives
It would be estimated that Trump may remove or at least reduce the EV incentive programs. These would include the rebates and tax cuts put up in the Inflation Reduction Act (IRA) that focuses on clean energy and the expansion of EVs.
Experts believe that Trump may be forced to retain some of the incentives while billions of dollars have already been invested in EV production in more traditionally conservative states, like Ohio, South Carolina, and Georgia. A partial rollback could make it more difficult for new players like Rivian and Lucid to compete against legacy automakers.
Wedbush analysts warned that a Trump administration might spell doom for EV startups as it removes essential financial support. Without rebates and tax incentives, companies like Rivian or Lucid, which still build brand awareness, cannot compete against the well-established automobile firms.
Both of them issued statements with the battery maker LG confirming their willingness to collaborate with Trump's administration about maintaining momentum on EVs, but the details remain unclear.
Legacy Carmakers in the Lead
However, Trump's policies may benefit legacy automakers such as General Motors, Ford, and Stellantis, which have risen 2.5% and 5.6% so far after the election. He may relieve pressure on these companies to decarbonize quickly and find ways to maintain traditional fuel-based vehicles in their portfolios.
Relaxing emissions and production standards may make it easier for companies that are slower to adhere to EV technology.
Plans to Roll Back California's EV Mandates Under Trump
As per CNBC, the Trump administration may also try to revoke California's right to have its own independent automobile emissions standards. California's aggressive under the Advanced Clean Cars II mandate requires that 35% of all new 2026 model-year vehicles be zero-emission and seeks 100% by 2035.
In 2019, Trump revoked California's waiver, which Biden restored. In the event of yet another turnaround by Trump, this one may help defeat many of the aggressive EV targets set by California and other states based on such standards.
CAFE Changes
The auto industry leaders will probably look for him to undo the Corporate Average Fuel Economy standards established to increase the fuel efficiency of cars sold in the U.S.
A freeze or rollback of these standards may enable car makers to produce fuel-inefficient vehicles they have preferred, which would limit the momentum toward cleaner transport.
The American Trucking Association has already called on Trump to soften the emissions targets from the EPA, which has highlighted some practical issues for the trucking industry.
