What’s the Trump effect on the EV market? Depends: Smaller players like Rivian and Lucid are potentially at risk, while Tesla has the scale, profitability, and Trump connection to make it work, despite major shifts that are sure to come. Here’s the scoop on how a second Trump term may play out among automakers:
Yesterday’s market gives us a quick insight into how things may measure up in the EV industry – with Tesla of course being an outlier as Elon Musk heavily campaigned for Trump in crucial swing states and stands to gain considerably with his ties to the future president. Tesla shares soared by 15%. Meanwhile EV startups Rivian and Lucid saw shares drop yesterday by 5.3% and 8.3%, respectively.
“We see RIVN and LCID challenged, which is largely reflected in the stocks,” BofA Securities analyst John Murphy told CNBC. “We don’t expect meaningful issues for TSLA since it has already reached profitability and will introduce more entry level products that could be attractive for the larger public.”
Trump, who has been eager to denigrate EVs, has said that he’ll make quick work of rescinding the Environmental Protection Agency, modifying or ending altogether vehicle emissions standards. He has said too that vehicles made in Mexico would see as much as a 200% tariff, and vehicles from China, Europe, and elsewhere will likely see higher tariffs.
The future president may also eliminate many EV incentives, including purchase rebates and tax incentives that are part of Biden’s Inflation Reduction Act. However, billions of dollars in investments into EV production under the IRA have been taking place in red states, such as South Carolina, Ohio, and Georgia, so it’s unlikely that everything is going away.
Rivian and Lucid shares take a tumble
Wedbush analysts say that all of this bad buzz, of course, won’t be good for EV startups such as Lucid and Rivian. “We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates/tax incentives get pulled,” the Wedbush analysts said, as reported in CNBC.
After the election news yesterday, Tesla, Lucid, Rivian, and EV battery maker LG have all said that they are ready to work with Trump to ensure EV technology continues on pace, Reuters reports – but that will mean or how it will work is not yet clear. Of course, Musk’s role in all of this and his sway on Trump is yet to be determined since Tesla heavily relies on China as a production base and major market.
And the winners are… ICE makers GM, Ford, and Stellantis
Legacy automakers, particularly the Big Three in Detroit – General Motors, Ford, and Chrysler parent company Stellantis – will likely the biggest “winners” of Trump’s win, meaning they won’t have to decarbonize their portfolios and shift to EVs at any set pace, Reuters reports. Yesterday, shares of GM and Ford closed up 2.5% and 5.6%, respectively.
Top comment by Michael
The irony is during Trump's first term in office one of his first priorities was getting rid of nafta in favor of USMCA. USMCA intentionally raised the cost of producing cars and replacements parts in Mexico by getting Mexico to agree to paying Mexican workers $16 US per hour. The idea was that if it's too expensive to produce in Mexico that companies would just come back to the US. Fast forward a few years later and the costs of producing cars and the replacement parts from Mexico are at insane levels, so much so it's affecting car insurance all over the US. What was genius is that trump and Republicans successfully controlled the narrative that it was Democrats and socialism that caused inflation to skyrocket but it was part of Trump's tariffs and nerfing cheap labor in Mexico. You all wanted made in America, well it comes at a cost folks. Now you'll get to see Trump and Republicans convince you that inflation is good and that paying a little bit more will help save America. Watch these narrative spins happen right away as Trump says he inherited a mess and that the only way to get out of it is to increase inflation to fix what Democrats broke. So congrats to those who voted for Trump who caused the problem in the first place but now magically has the solution.
Make sure you own what's about to come next Republicans.
In other plans, Trump also wants to rescind California’s ability to set its own rules regarding vehicle emissions and requirements for BEV sales – he already did this in 2019, but Biden reinstated it. The state’s current requirements the “Advanced Clean Cars II” regulations of 2022 call for 35% of 2026 model year vehicles to be zero-emission vehicles. The California Air Resources Board has stated that 12 states and Washington, DC, have all adopted the rules, while half of them start with the 2027 model year. CARB’s regulations require 100% of new vehicle sales in California to be zero-emission models by 2035.
The American Trucking Association, the largest national trade association for the trucking industry, jumped in to ask Trump to water down the EPA’s tailpipe emissions goals with a fresh set of standards that were “technologically achievable and account for the operational realities of our essential industry,” Reuters wrote.
Auto execs also expect Trump to roll back or freeze the Corporate Average Fuel Economy, or CAFE, standards for model years during his term.
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