Donald Trump's executive orders targeting electric vehicles and Biden-era climate policies threaten the US auto industry's transition to EVs and billions of dollars in investment.
In the midst of Donald Trump ’s executive orders dump on Tuesday were some that could undermine the American auto industry’s efforts to remain a force in the global industry, along with hundreds of billions of dollars of industry and taxpayers’ investment. Under the heading of “Unleashing American Energy,” Trump issued orders that target electric vehicles and the Biden administration’s policies that have fuelled a boom in investment in EVs and their batteries in the US.
Donald Trump’s antipathy towards Joe Biden’s EV and climate-related measures could spell trouble for the US car industry. \The order said that Trump’s administration would “eliminate the (EV) mandate” and “promote true consumer choice, which is essential for economic growth and innovation, by removing barriers to motor vehicle access by ensuring a level regulatory playing field for consumer choice in vehicles”. The administration would end, “where appropriate, state emissions waivers that function to limit sales of petrol-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favour EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable”. Trump revoked a 2021 Biden order that set a non-binding aspirational target for EVs to comprise half of new vehicle sales by 2030 and also said he would end a federal exemption for California that would allow it to phase out the sale of petrol-driven vehicles by 2035. The size of California’s auto market means its ambition would have national implications for the take-up of EVs and the production plans of the major US auto companies. Leaving aside the clunky language of the orders (and the fact that there is no “mandate,” but rather incentives to encourage purchases of EVs to help lower America’s carbon emissions), they foreshadow the withdrawal of the Biden administration’s $US7500 ($12,000) tax credit for new EV purchases and $US4000 credit for purchases of used EVs. \Trump will also halt spending on the $US5 billion Biden administration rollout of EV charging stations – a goal was set of 500,000 chargers by 2030 – and has made it clear that he wants to end the subsidies for EV manufacturing and battery factories within Biden’s 2022 Inflation Reduction Act (IRA). Removing those subsidies, loans and grants – gutting a key element of the IRA – would probably require congressional approval, which could be problematic, given that much, if not most, of the massive investment in new plants has been focused within “red,” or Republican-dominated, states. Trump seems to be driven, as the title of the orders suggests, by his commitment to increasing US oil and gas production despite US oil output running at record levels under Biden. Reduced demand for petrol if the EV transition were to continue would conflict with. The unintended consequences of withdrawing the incentives for EV purchases and investment in new EV plants and battery factories could, however, be severe. Fuelled by those incentives within the IRA, more than $US130 billion has been invested or committed to new battery factories – with more in the pipeline – and tens of billions of dollars have been invested in EV plants in the biggest splurge of investment in the sector in decades. Ford – one of America’s oldest companies – is among the major auto producers pivoting its business towards electric vehicles.Ford, GM, Toyota, Stellantis, Honda, BMW and others have all invested heavily in EV-related capacity, and there has been a similar boom in the rest of the supply chain for EVs, including the critical minerals needed for batteries. The range of incentives to purchase or make EVs and their batteries is designed to make the pricing of EVs competitive with internal combustion-driven vehicles while the EV sector scales up and also to counter the subsidies and other forms of government support EV manufacturers receive in other jurisdictions and in China in particular. Those massive investments would be stranded if Trump removes the US incentives; EV take-up in the US would slow; US auto companies efforts to catch up with the Chinese, Europeans and Japanese in EV and battery technologies would be handicapped and, with the rest of the world steadily moving towards an EV future, the role of the US companies within the global industry would be steadily diminished, and relegated to producing anachronistic vehicles for a domestic market. While the take-up of EVs and hybrids in the US has been slower than in other major markets, and the major manufacturers have been losing money on their EV sales, the commitment of companies like Ford and GM to continuing to invest in EV and EV batteries production signals their view of the industry’s future
Technology ELECTRIC VEHICLES AUTO INDUSTRY DONALD TRUMP JOE BIDEN CLIMATE POLICY INFLATION REDUCTION ACT
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