What Trump 2.0 actually means for EVs

It’s been a volatile couple days for electric-vehicle stocks, since former President Donald Trump prevailed in his bid to return to the White House next year.

Rivian tumbled 8% on Wednesday before recovering Thursday, and Lucid saw similar swings. (Tesla, on the other hand, shot up 15% on Wednesday, but we’ll come back to that.) Behind those swings is deep uncertainty about what Trump’s win means for the federal government policies at the heart of the EV business.

EVs were the target of a blistering negative advertising campaign in auto-industry center Michigan, for example, where they were painted as a risk to manufacturing jobs and unionized autoworkers.

Trump himself regularly took to saying of the vehicles, “They’re all made in China,” according to Bloomberg News. (They’re not. Tesla’s Model Y, the bestselling electric vehicle in the world, for instance, is made in the US.)

But what’s unclear is exactly what Trump plans to do once he returns to power. Bloomberg’s Kyle Stock reports:

“The easiest EV target to hit from the Oval Office would be consumer incentives, specifically tax rebates worth up to $7,500 per vehicle afforded by the Inflation Reduction Act. Even if there isn’t enough support in Congress to overturn the legislation entirely, Trump could make the credits harder to qualify for by putting stricter limits on where various parts and pieces are sourced from.”

Likewise the Detroit Free Press reports:

“It would be difficult for him to completely gut President Joe Biden’s Inflation Reduction Act initiatives, but through executive orders, Trump could defund or limit some of the EV subsidies included there. Many parts of the IRA, such as expanding EV charger infrastructure, were in place to help the Detroit Three encourage EV adoption.”

But here’s where we return to Tesla and the increasing prominence of its CEO Elon Musk in Trump’s orbit. Musk’s influence has made it less and less clear how Trump will proceed. As The Wall Street Journal notes:

“Trump has spoken skeptically of electric vehicles and federal policies that promote their use — including a $7,500 electric-vehicle tax credit. More recently, he has sounded a more positive note. ‘I’m for electric cars,’ Trump said in August. ‘I have to be because Elon endorsed me very strongly.’”

Interestingly, Tesla analyst Dan Ives told the Free Press that Tesla “does not need the tax credit as much as GM and Ford does, Ives said, because Tesla has the sales volume to lower prices and other cost advantages.”

Additionally, if Musk is indeed made “secretary of cost-cutting,” he could use that role to slash regulations slowing a nationwide rollout of Teslas’s autonomous vehicles. Investors’ confidence in his ability to sway Trump to his side partially motivated Wednesday’s massive rally.