One might expect President-elect Donald Trump’s wholehearted support for oil and gas drilling to chill the electric vehicle industry if it weren’t for a wild card in his young administration: the CEO of Tesla, Elon Musk.
Trump has long denounced mandates and subsidies for electric vehicles. Then came August, when Musk endorsed Trump and began investing millions of dollars in the Trump campaign. Shortly after, Trump said he now favored some market share for electric vehicles.
“I have to be, you know, because Elon has been very supportive of me,” Trump told a rally in Atlanta.
What does the Trump administration mean for the future of electric vehicles?
Clean transportation advocates hope Musk will continue to influence Trump’s stance on electric vehicles.
“If there’s a silver lining” to Trump’s victory, said Ramses Madou, president of the Open Mobility Foundation, “it’s that Elon Musk can roll back Trump’s anti-EV.”
Here are some of the issues facing supporters of electric cars and trucks, and how Musk could influence them.
BUYER INCENTIVES
Reuters and other news outlets reported Friday that Trump plans to end the $7,500 consumer tax credit for electric vehicles – a move Musk supports.
Having built his business on federally funded purchasing incentives, Musk believes Tesla no longer needs them – and that removing the subsidies will mainly hurt its competitors.
“Remove subsidies,” Musk wrote on X in July. “This will only help Tesla.”
Why would a company turn down such free money? Because Tesla is profitable, while the electric vehicle sector among traditional automakers is not yet. Eliminating buyer credits would hurt them more than Tesla, whose electric vehicle market share has started to decline in the face of new competition.
But the story doesn’t end there: So far this year, Tesla has reported a profit of $4.79 billion. Of this amount, $2.07 billion came from credits required by the government purchased from Tesla by other automakers. This represents 43% of net income.
The federal electric vehicle credit system has a simple concept: sell too many gasoline cars, and you run up deficits. If most of the vehicles you sell are electric vehicles, you earn credits. To avoid government sanctions, deficit holders must purchase credits from companies like Tesla.
In other words, Tesla’s competitors are directly and significantly increasing Tesla’s profits through rich cash flows that they otherwise could have used in their own electric vehicle development.
How do incentives for purchasing electric vehicles fit in and why would Musk want to see them gone? The fewer electric vehicles other automakers sell, the more credit Tesla takes in as pure profit, driving up its own stock price and putting pressure on the shares of its competitors. Since the election, Tesla stock has risen 28%, closing at $320.72 on Friday. Stocks of most other automakers are stuck in neutral.
FEDERAL GRANTS
Tesla doesn’t just build passenger vehicles, it also builds commercial trucks. At least that’s what he tries. With much fanfare, Musk introduced the large all-electric vehicle Tesla Semi in 2017. To date, the company has sold very few of them. It plans to begin mass production in 2026. Meanwhile, traditional truck makers are selling their own large electric vehicles and can’t keep up with demand.
Demand is high due to California government mandates, complemented by generous state and federal grants worth billions. Few would buy an electric truck today without government help. A new diesel truck typically costs between $150,000 and $200,000. An all-electric version costs two to three times that amount.
Removing these federal subsidies could help Tesla fight off competition. That would hurt major truck makers and could destroy electric truck startups, while giving the long-delayed Tesla Semi time to catch up.
The federal grant is also available to buyers of hydrogen fuel cell trucks. Musk has long downplayed fuel cell vehicles, and Trump has often talked about hydrogen cars exploding like an “atomic bomb.” This is a gross exaggeration, as gasoline, battery, and hydrogen vehicles are all prone to fires and explosions, albeit in different ways. However, if Trump asks Musk’s opinion on abandoning support for hydrogen vehicles, Musk will be sure to encourage him.
PRICES
Musk’s conversations with Trump on tariffs could be tricky. Tesla operates a massive assembly plant in Shanghai, subject to Chinese government control. Although he shows little self-regulation in launching scathing attacks on politicians he doesn’t like, Musk has only kind words for Chinese leaders, including President Xi Jinping.
Earlier this year, Musk appeared to support trade barriers against a potential influx of Chinese electric vehicles into the United States, saying Chinese companies could “demolish” other electric vehicle makers around the world. But in a few months, he changed his toneopposing tariffs on electric vehicles because “things that hinder free trade or distort the market are not good.”
One of the main pillars of Trump’s economic policy is the “handsome tariffs” of 60% or more on Chinese goods. Business leaders, economists and even members of his own party have warned that such a policy could spur inflation and hurt economic growth.
“Most of the goods America imports are intermediate goods used in the production of other things,” thereby increasing the costs of U.S.-made goods and causing economy-wide “self-harm,” according to Jonathan Humphrey, senior economist at Benchmark Mineral. Intelligence. It mainly talks about all the intermediate products that go into the manufacturing of cars, batteries and their parts, even for products made in the United States.
Trump is getting advice from all sides on the issue, and it remains to be seen whether decisions on tariffs go Musk’s way — or Xi’s.
CHARGE
Musk doesn’t talk much about federal funding for public electric vehicle charging stations, but it’s hard to see why he would object.
Biden’s bipartisan infrastructure bill dedicated $5 billion to building public car and truck charging stations every 50 miles along interstate highways. Tesla has built an extensive and reliable network of charging stations and is now inviting non-Tesla electric vehicle owners to pay Tesla to use them, but more electric vehicle charging stations in more locations will make things easier for electric vehicle owners. Tesla – and will alleviate the need for Tesla will invest capital to build more.
Trump is unlikely to cut a program that would produce economic benefits across the country, in red and blue congressional districts. Regardless, the money is already allocated, and “it would take an act of Congress to change that,” Debs Schrimmer of the U.S. Joint Office of Energy and Transportation said at the CoMotion mobility conference LA in Little Tokyo last week.
CERTAINTY
Musk has never been seen as the one to inject certainty into any situation. This adds to the tension around Trump’s economic plans.
Alex Gold, managing director of BWD Strategic North America, is optimistic about the future of electric vehicles, even under Trump.
“Rather than giving up on clean energy, maybe he’ll just relax on dirty energy so people can do both,” Gold said. “If Trump is pro-business, what businesses want is certainty, and a U-turn now would be surprising. »