Power Politics: What Trump’s Win Portends for EVs and Batteries

Donald Trump’s decisive win in the US presidential election has brought the electric vehicle (EV) and battery industries face to face with the GOP nominee’s promise of adding tariffs and removing or reducing tax credits and Inflation Reduction Act incentives. On the morning after the election, internal-combustion-engine (ICE) vehicle suppliers saw their stocks rise while EV stocks fell—with one major exception.

Morning-after winners and losers

Seeking Alpha News reports stock prices rising for such ICE auto parts suppliers as Commercial Vehicle Group (+11.9%), Douglas Dynamics (+9.3%), Stoneridge (+8.0%), Dana (+7.7%), Allison Transmission (+6.8%) and PHINIA (+8.0%).

Concurrently, stock prices fell for EV-related companies as ChargePoint Holdings (-10.4%), Niu Technologies (-6.6%), Blink Charging (-8.1%), EVgo (-7.5%), Polestar Automotive (-5.8%), Hesai Group (-5.5%), Innoviz Technologies (-2.3%), and QuantumScape Corp. (-2.1%).

The exception to the EV stock slide is Tesla, which instead swung up +11.6—the biggest gainer in the automotive sector on Wednesday morning. The Tesla exception is rather unsurprising due to Tesla CEO Elon Musk's full-throated support of Trump, with whom he celebrated on election night.

Tesla CEO Elon Musk (R) endorses Republican presidential nominee, former President Donald Trump during a campaign rally on October 05, 2024 in Butler, Pennsylvania. KEVIN DIETSCH/GETTY IMAGES

That’s a morning-after market snapshot; the sources of longer-term uncertainty are the fates of the Biden administration-passed Inflation Reduction Act (IRA) legislation and tax credits as well as the range and amount of Trump’s promised tariffs. Both will depend on how much of the President-elect’s campaign rhetoric will be match by actual outcomes—always a big question.

Related:Honda Launches Demonstration Line for All-Solid-State Batteries

IRA in the bullseye?

Donald Trump has vowed to withdraw any unspent Inflation Reduction Act funds, a move that could slow or halt projects as companies reconsider moving forward under new uncertainty. “We will rescind all unspent funds under the misnamed Inflation Reduction Act,” Trump declared in September. While a full repeal of the IRA may prove difficult given its extensive reach, sections like EV and charging station tax credits could face reductions under a second Trump administration.

Conservative groups also suggest that Trump may focus on specific areas, such as the Department of Energy’s Loan Programs Office, which currently manages $210 billion in loan authority for clean energy initiatives. This potential rollback is concerning for industry leaders who warn of limited support for advancing clean energy technologies. As Andrew Reagan of Clean Energy for America noted to the New York Times, “A big question … is whether we’ll continue to see a rapid acceleration of clean energy that helps us meet our climate targets.”

Related:Electric Vehicles Galore at Electrify Expo

On Wednesday morning on LinkedIn, R&D&I Strategy consultant Stefan Wolf argues that not much will actually happen to the IRA:

This is in line with what S&P Global Mobility Associate Director Stephanie Brinley stated last week: “The trend toward EVs is going to continue regardless of the election,” she said, noting that the election will likely influence the speed of this shift. A Congress led by Republicans could introduce regulatory rollbacks and potentially reduce the Inflation Reduction Act’s projected $1.2 trillion in tax credits over the next decade.

Under a second Donald Trump administration, this regulatory shift might decelerate the expansion of EVs and energy storage. Changes could include a freeze on emissions standards and cuts to EV tax credits, which analysts say could restrict EVs to just 29% of new sales by 2030. Despite these potential setbacks, S&P Global projects continued growth for EVs, driven by extensive investments across multiple states, many of which lean Republican or are swing states.

For energy storage, analysts expect limited disruptions. Powin Energy CEO Jeff Waters commented, “For stationary storage, I just don’t see it having a massive impact,” noting that even with a Republican majority, major rollbacks seem unlikely. Waters emphasized that billions invested in “red states” have generated bipartisan support among legislators at various levels.

Related:Startup Uses Tech to Upgrade the “Dollar Van” Experience

Trump’s tariff talk

Donald Trump has frequently expressed intentions to raise tariffs on imported goods, particularly on goods from China, though specifics remain unclear. “The numbers can change,” observed Charles Klein, Station Manager at OEC Group’s Detroit office. “When Trump was president, the numbers changed too. We’ve had pretty much every percentage, right?”

Trump has floated the idea of a 10 percent blanket tax on all imports. Haver Analytics reports that around 25 percent of the parts used in the assembly of U.S.-made cars and trucks are imported, which would subject them to this proposed tariff.

However, Preston Caldwell, senior U.S. economist at Morningstar Research Services LLC, estimates just a 7.5 percent chance that a re-elected Donald Trump could secure his proposed 10 percent tariff across all imports.

That estimate breaks down to only a 15 percent probability that Trump would seriously pursue the tariff and a 50 percent chance of success if he did. “There’s a high likelihood that this 10 percent tariff talk is mere bluster,” Caldwell wrote on Morningstar’s blog, adding, “He talked about similar tariffs during his first term, but they were never seriously pursued.”

Industry challenge: Parsing Trump’s rhetoric

That example shows why Mr. Trump remains a conundrum for industry watchers: He continues to be a kind of Rorschach test for his electoral supporters, who support him in some areas because they staunchly believe what he says—and support him in other areas because they assume he’s simply not telling the truth.

That makes the tariff issue as well as IRA and tax-credit issues somewhat uncertain for now—although it’s possible that his burgeoning relationship with Tesla’s Elon Musk may restrain his long-professed anti-EV animus and future actions.

“Musk’s close ties with the Trump administration may alleviate potential disruptions that would otherwise come from the Trump administration related to the EV market, particularly the Inflation Reduction Act (IRA) polices,” Abey Abraham, Managing Principal of Ducker Carlisle in Troy, MI has stated. We’ll see.