**Donald Trump’s Second Term: Implications for the Automotive Sector and Electric Vehicles**
Yesterday, Donald Trump clinched a second presidential term, an event likely to produce major effects on the automotive sector, especially regarding electric vehicle (EV) adoption, environmental policies, and trade strategies. Throughout his initial term, Trump made moves to dismantle environmental regulations, and his campaign for 2024 hints at a continuation of this approach. With an emphasis on deregulation and a more protectionist trade policy, the prospects for the auto industry—particularly concerning EV adoption—seem precarious.
### Electric Vehicle Adoption
One significant accomplishment of President Joe Biden’s administration was the introduction of the Inflation Reduction Act (IRA) in 2022, featuring a $450 billion climate initiative. This legislation modified the clean vehicle tax credit, encouraging consumers to buy EVs by mandating that final assembly occur in North America and that an increasing share of battery components and minerals be sourced domestically. The objective was to enhance EV adoption and lessen dependence on foreign supply networks.
Nonetheless, Trump has been outspoken against EVs. During his initial term, he voiced doubts about the feasibility of all-electric vehicles, asserting that “all-electric is not going to work.” His 2024 campaign reiterated this viewpoint, with Trump pledging to abolish what he referred to as the “electric vehicle mandate” on his first day in office. This mandate pertains to the Biden administration’s ambition of achieving 50% EV adoption by 2030, a goal Trump has ridiculed as a component of a “new green scam.”
The **Project 2025 policy document**, crafted by the conservative Heritage Foundation, delineates the Republican Party’s perspective on EVs. It emphasizes the right of Americans to select their vehicles, opposing any governmental attempts to steer consumers towards electric cars. Additionally, it proposes to constrain the California Air Resources Board’s (CARB) authority to set emissions standards that extend beyond California. Presently, 16 other states and the District of Columbia adhere to CARB’s stricter emissions regulations, but a second Trump administration could rescind California’s waiver, effectively reversing these regulations nationwide.
### Fuel Efficiency Standards at Risk
Fuel efficiency standards scheduled to come into effect in two years under the Biden administration are likely to be eliminated as well. During his first term, Trump made efforts to weaken fuel economy standards, sidelining the Environmental Protection Agency (EPA) while adopting a more lenient stance towards automakers. With Trump returning to the presidency, it is anticipated that these standards will be further compromised, permitting automakers to produce vehicles with lower fuel efficiency.
This could prompt a resurgence of gas-guzzling SUVs and pickup trucks, which were in demand during Trump’s initial term. Automakers like Ford, which has reported considerable losses in its EV sector, may revert to focusing on more profitable, larger vehicles. This shift would likely decelerate the transition to electric vehicles, particularly among U.S. automakers, while companies like Toyota and Stellantis, which have lagged behind in EV advancements, might welcome the diminished pressure to convert their fleets to electric.
### Tesla’s Situation Under Trump
Tesla, the predominant EV manufacturer in the U.S., might find itself in a beneficial position under a second Trump administration. Tesla’s CEO, Elon Musk, has recently aligned more closely with conservative values. Musk has contributed tens of millions of dollars to Republican campaigns, including over $150 million to Trump’s reelection bid.
Speculation exists that Trump could offer Musk a role in his administration, potentially as a key advisory figure or even heading a government department. If Musk were to assume control of the Department of Transportation, which oversees the National Highway Traffic Safety Administration (NHTSA), it could substantially lessen the regulatory scrutiny that Tesla currently experiences. The company has faced at least 14 safety investigations related to its “Full Self-Driving” and “Autopilot” systems, and a Trump administration might be less likely to enforce costly recalls or regulations on Tesla.
However, certain Tesla investors worry that a cabinet role for Musk could detract from his responsibilities as CEO. Musk already divides his time among several companies, and a governmental position could divert him from Tesla during a period when the company encounters growing competition within the EV sector.
### Trade Policy and Import Tariffs
Another domain where Trump’s policies are predicted to have considerable influence is trade. During his first term, Trump enacted tariffs on a range of imported products, and his 2024 campaign indicates he may go even further. Trump has suggested supplanting federal income taxes with import tariffs, which could substantially elevate the price of imported cars and automotive components.
The Biden administration has already initiated measures to shield U.S. automakers from inexpensive Chinese imports, including instituting a 100% tariff on Chinese-made EVs. However, Trump’s trade policies could heighten this protectionism, potentially resulting in increased costs for imported vehicles and parts. This would affect
