What a Trump, Vance presidency could look like for the EV market

Presidential candidate Donald Trump and his new running mate J.D. Vance have shed light on their plans for the automotive sector, should their bid for the White House succeed in November.

Where do the Republican candidates stand?

Trump: During the final night of the Republican National Convention (RNC), Trump promised to end Biden’s EV “mandate” on his first day as President. Accomplishing this goal would save the car industry from “complete obliteration,” he added, while also “saving U.S. customers thousands and thousands of dollars per car.”

Vance: While not addressing the car industry during his appearances at the RNC, J.D. Vance previously authored a bill that would have gone a step further, changing a key aspect of the Biden Administration’s Inflation Reduction Act. This law provides Americans with credits up to $7,500 for their purchase of a qualifying EV, with eligibility determined by the number of components manufactured or sourced in the U.S.

In September of last year, Vance instead proposed the “Drive America Act” which would transfer this credit to buyers of internal combustion engine (ICE) cars, provided they meet similar domestic sourcing requirements.

What would these policies mean for the car industry?

Reversing Biden policies: Trump’s bid to end the EV “mandate” likely refers to the Environmental Protection Agency’s (EPA) latest emissions guidelines, which would levy heavy fines against automakers that fail to meet fuel economy targets.

To avoid those penalties, manufacturers would need to substitute an increasingly bigger share of sales with more efficient models. However, since there is no stipulation on what kind of vehicle brands use to accomplish this, the law is technically not a mandate. Nevertheless, reversing course on the regulations, which have already been revised from previous interactions to accommodate feedback from the car industry, would heavily de-incentivize electrification.

The Drive America Act: The same can be said for Vance’s proposed solution to the EV market. However, it is not clear whether the prospective VP’s strategy to give credits to ICE car buyers would receive support from Congress or even the President. Last month, the Treasury Department said the government had awarded roughly $1 billion in EV tax credits since the start of the year.

Of the nearly 8 million new cars sold in the U.S. in 2024 so far, about 8% have been electric. Were America to subsidize even a fraction of the remaining 92% of auto purchases, its tax-credit budget would increase drastically, something lawmakers are unlikely to support. It would also have the unintended effect of supporting foreign car manufacturers with facilities in the U.S., that have surpassed “American-made” brands in domestic production.

Closing thoughts:

It’s clear from the GOP candidates’ stances that a second Trump presidency would heavily impact the fledgling EV market’s growth, which is already facing a plethora of challenges ranging from poor driving ranges to inadequate charging availability.

That being said, if the last few weeks have taught us anything it’s that nothing is for certain. The former President’s tone on EVs has notably lightened in recent weeks following an endorsement from Tesla CEO Elon Musk, who has pledged to donate $45 million per month to support his campaign. While their partnership is perplexing, considering previous interactions between the two, it could signal a new era of open-mindedness on the side of the Republican party, at least when it comes to EVs, even if that consideration is only motivated by cash.

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