With the election of Donald Trump as the 47th President of the United States, his promise to “end the electric vehicle mandate on day one” of his administration echoes across the automotive landscape today.
The shift in political and regulatory philosophy will surely slow domestic investments, innovation, and production that were already in pullback mode due to slow consumer adoption and immature charging infrastructure. In a blog post published just last week, Cloud Theory pointed to EV supply and demand coming into better balance with the easing of regulatory targets earlier this year. A 2.2-point gap in market share vs. inventory share was cut in half in the latest quarter.
A change in EPA leadership and legislative pressures will create additional headwinds in the short term that will carry over into the longer term. Pushing the environmental rock up the hill is hard work, and it is exponentially harder when the energy to do so is diminished or countermanded.
But…Trump’s assertion overlooks several relevant facts that are worth calling out. First, there is no electric vehicle “mandate”. Consumers are not being forced to buy EVs, nor are manufacturers being forced to produce them. Second, the painstaking process that precedes a change in EPA regulations cannot be overridden by an executive order. Third, OEMs have made significant investments in battery technology, manufacturing facilities, charging infrastructure, and other related capabilities that would be sunk costs if EVs were to fade away. And fourth, ceding EV innovation to countries such as China could have profound and long-term geopolitical and macroeconomic ramifications that will transcend a four-year term of a second Trump era.
In the U.S., how will Trump’s relationship with Elon Musk (and, by association, with Tesla) affect the competitive EV landscape? Trump has signaled that Musk’s endorsement had shifted his thinking about this issue, though this appears to be oriented around Tesla in particular and not EVs in general. He was quoted as saying at a recent rally that he “[had] no choice” to back EVs because “Elon endorsed [him] very strongly” but went on to say that those vehicles were suitable only for a “small slice” of U.S. consumers. With Tesla’s current lion’s share of sales in this sector, it appears that the spoils are there for that company’s taking. The path to EV growth for other OEMs will now be harder without proactive support (or—looking at it another way—pressure) to push it.
The EV story is still in its nascent stages, and last night’s outcome will create more twists and turns in the narrative. The world will continue moving toward an EV future, and the shift in White House control will not likely change the long darc of development in this area. With all of the uncertainty that the election outcome raises, one thing is for certain. How we participate in or lead the EV effort over time will be an interesting chapter in a book that is still being written.
