Can Trump Really Slam the Brakes on Electric Vehicles?

Source: By Coral Davenport and Jack Ewing, New York Times • Posted: Tuesday, May 28, 2024

He has vowed to shred President Biden’s E.V. policies and has threatened that “You won’t be able to sell those cars.”

Three lines of white cars inside an auto factory building, with workers in white clothing.
Vehicles at the flagship Honda factory in Marysville, Ohio, which is being retooled to produce electric vehicles in 2025.Maddie McGarvey for The New York Times

Donald J. Trump is crystal clear about his disdain for electric vehicles. The former president has falsely claimed electric cars don’t work, promised to shred President Biden’s policies that encourage E.V. manufacturing and sales, and has said he would slap a “100 percent tariff” on electric cars imported from Mexico if he retakes the White House.

“You’re not going to be able to sell those cars,” he has said.

But analysts say that even if Mr. Trump is elected and ends federal policies that support electric vehicles, by the time that happens, the market may have reached a level where it would keep growing without government help.

A record 1.2 million Americans bought electric vehicles last year, making up 7.6 percent of new car sales and moving the cars and trucks from the margin to the mainstream of the American auto market. Analysts project that will climb to 10 percent this year, which researchers say could signal a tipping point for rapid, widespread E.V. adoption.

While a Trump presidency couldn’t slam the brakes on the E.V. transition, it could throw enough sand in the gears to slow it down. And that might have significant consequences for the fight to stop global warming.

President Biden placed electric vehicles at the heart of his climate agenda because scientists say that a rapid switch from gasoline-powered cars to electric versions is one of the most effective ways to slow the carbon dioxide emissions that are dangerously heating the planet. Last year was the hottest in recorded history and scientists say the world is on track to heat up even more, to the point where parts of the planet will be unlivable.

The Biden administration has implemented one of the most ambitious climate regulations in the nation’s history, an Environmental Protection Agency rule designed to ensure that more than 50 percent of new passenger vehicles sold in the United States are all-electric by 2032.The administration has paired that regulation with tax incentives to encourage automakers to produce electric vehicles and motorists to buy them. And to help American carmakers compete with cheap imports and give the domestic market a chance to develop, Mr. Biden has placed a 100 percent tariff on electric vehicles made in China.

All that is at stake in November, said Margo Oge, who headed the E.P.A.’s transportation emissions program under three presidents and is the author of “Driving the Future,” about the E.V. market. “If Trump is elected, we absolutely will not reach Biden’s target,” she said.

Mr. Trump has famously dismissed the overwhelming scientific evidence that the planet is heating as a result of the burning of oil, gas and coal as “a hoax.” He is heavily courting the fossil fuel industry oil and gas industry, telling executives at one recent private dinner they should donate $1 billion to his campaign so he could retake the White House and reverse Mr. Biden’s climate policies.

A second Trump administration could hinder electric vehicles in several ways, by rolling back the regulation that limits tailpipe pollution and by changing the rules set by the Treasury that determine the number of electric vehicles eligible for tax credits.

If Republicans gain control of Congress, a Trump administration could also work with those lawmakers to rescind parts of the 2022 Inflation Reduction Act, which provided at least $370 billion in tax credits for clean energy, for battery manufacturing and for E.V. sales and manufacturing.

But Mr. Trump may find the auto industry and its suppliers are cool to his plans to thwart electric vehicles, Ms. Oge said.

It is likely that some major automakers, if not all, will continue to invest in making and marketing electric vehicles while motorists continue to buy them, Ms. Oge and other analysts said. Companies will continue to build E.V. charging stations, batteries and other parts of the supply chain, they said. And some parts of the electric vehicle industry would most likely lobby to protect favorable policies.

For years, automakers fought federal efforts to impose tight controls on tailpipe emissions that would compel them to sell electric vehicles. But now that the Biden administration is requiring tough new limits on tailpipe pollution, and companies have sunk billions into new processes to build electric vehicles, some automakers say that a sharp U-turn in E.V. policies could harm their industry.

“The auto industry is in a very different place than it was in 2017,” said John Bozzella, president of the Alliance for Automotive Innovation, which represents 42 car companies that produce nearly all of the new vehicles sold in the U.S.

When Mr. Trump was elected in 2016, E.V. sales were about 1 percent of the auto market, while today they’re approaching 10 percent, Mr. Bozzella noted. “In 2017 there were a handful of plants in the U.S. making E.V. batteries, and today there are dozens,” he said. “The market is different, the automotive industrial base is different, and the world is different.”

Mr. Trump may find that some automakers do not want a reversal. For example, Ford Motor has intervened on behalf of the E.P.A. in a lawsuit by Republican attorneys general and oil companies to block the Biden administration’s limits on tailpipe emissions.

William Clay Ford Jr., executive chair of Ford Motor, said the company didn’t want the rules to change with the winds of politics. “Our time frame as a company, our planning time frame, is a lot longer than election cycles,” Mr. Ford said at an event organized by the Detroit Free Press last month. “When we’re whipsawed back and forth by politicians that becomes really difficult for us.”

Other automakers may simply ask Mr. Trump to slow down implementation of the tailpipe regulation, by perhaps extending deadlines for compliance, rather than delete it entirely.

It is unclear whether a Republican-controlled Congress would rescind the tax credits provided by the Inflation Reduction Act. While 20 Republican senators have introduced legislation that would roll back tax credits for E.V. manufacturers and for motorists who buy their cars, many of those manufacturing tax credits have been flowing to businesses in Republican-controlled states, including Georgia, South Carolina and Ohio. That could make some lawmakers reluctant to kill the tax credits.

Hyundai Motor, for example, is spending almost $8 billion on a factory near Savannah, Ga., that will produce electric vehicles. Together with the South Korean battery maker SK On, Hyundai is investing an additional $5 billion on a battery plant northwest of Atlanta. The two facilities will employ 12,000 people.

Hyundai, which imports most of its electric vehicles from South Korea, has rushed to complete the Georgia factories so it can sell U.S.-made cars that qualify for tax credits under the I.R.A.

State and local governments in Georgia offered Hyundai about $2 billion in tax incentives to build its plant near Savannah.

Hyundai decided to invest in Georgia before the Inflation Reduction Act became law, according to Garrison Douglas, a spokesman for Gov. Brian Kemp, a Republican. The “e-mobility space was already growing in Georgia before the federal government’s intervention,” Mr. Douglas said in an email.

If Mr. Trump wins the November election and is unable to get Congress to repeal the Inflation Reduction Act, he could amend Treasury regulations to sharply limit who can qualify for tax credits designed to encourage E.V. manufacturing and sales. For example, the Treasury Department could tighten restrictions on cars containing graphite processed in China. All electric car batteries require graphite, and almost all of it comes from China. Mr. Trump could cancel an exception that the Biden administration created this month that allows cars containing Chinese graphite to qualify for federal tax credits.

“If Trump comes through in November that is the obvious target for him,” Adam Panayi, managing director of Rho Motion, a research firm focused on batteries, told an audience of investors in New York last week.

Even that would probably be only a temporary setback for electric vehicle manufacturers. Several companies are planning to set up graphite processing in the United States, and others are working on a way to replace some of the graphite in a battery with silicon.

For car buyers, federal tax credits have helped to make electric cars more affordable, and have helped to expand the market for used electric vehicles. The credit of up to $4,000, which dealers can deduct from the purchase price and count as a down payment, means that a used Chevy Bolt car can be bought with payments not much higher than $200 a month, said Jesse Lore, owner of Green Wave Electric Vehicles in North Hampton, N.H., which only sells electric vehicles.

Mr. Lore said he did not think that a Trump presidency would kill electric car sales. “I would not have been wise if I started this business because of the tax credit,” Mr. Lore said. “It’s certainly a concern but I don’t think it destroys the market. It’s just going to slow it down a bit.”

The 2021 Bipartisan Infrastructure Law also provided $7.5 billion to states to build fast charging stations for electric vehicles. That could be rescinded if Mr. Trump worked with Congress to change the law. All 50 states have applied for the money, which is supposed to be used to construct fast chargers along major highways, so that drivers can recharge on road trips. Ohio, which has received more than $34 million in federal subsidies to build E.V. chargers, was the first in the nation to break ground on a federally funded E.V. charging station.

But private investment and state funds, over which a Trump administration would have no control, have often outpaced the federal program.

Sara Rafalson, a vice president at EVgo, a Los Angeles-based charging company that has built chargers in over 35 states, said that the company was seeing its biggest demand growth in Republican-led states like Texas and Florida.

Given the growth in electric vehicles and the investments in Republican states, it’s possible that those dynamics could play out in surprising ways in a new Trump White House, said Mike Murphy, a veteran Republican strategist who founded an E.V. advocacy group, the EV Politics Project.

“You have closet E.V. supporters in the Republican world,” he said. “There will be sober quiet voices even in Trumpland that will push back. And the nice thing about Trump is that he can always change. He’s totally transactional.”