President Trump recently gave the order to revoke what he calls the EV Mandate. This potentially clears the way for automakers to focus on whatever type of vehicles they wish as regulatory hurdles will no longer be a big consideration. President Trump also maintained that ending the EV Mandate would give consumers more choices.
Energy-Focused Directive With Broad Implications
One of Trump’s first directives after taking office was an energy plan that included verbiage to remove the EV mandate. This revokes an executive order from President Biden in 2021 that aimed to make half of new vehicle sales electric or plug-in hybrid by 2030. Trump also stopped the disbursement of government funds for EV charging stations. He further said that his government would terminate the EV waiver that allowed California and 11 other states to phase out gas-powered cars by 2035.
In general, states usually cannot make up their own EPA directives against federal guidelines such as the one in effect in California and recently copied by Washington. The EPA waiver allowed them to do so before Trump’s termination order. Although it wasn’t specifically mentioned by Trump, it’s also likely that the $7,500 federal tax credits on EVs will end, along with the stricter rules on tailpipe emissions.
What Industry Leaders Are Saying
The strict tailpipe emissions rule in particular was thought to ensure the necessity of more EVs by at least 2027. As that’s no longer the case, many industry leaders have spoken out in favor of Trump’s revocation of these restrictions. Toyota told Axios that artificial government mandates and subsidies aren’t working, while the president and CEO of the Alliance for Automotive Innovation opined that there’s a dissonance between EV demand and sales targets with the current regulations.
On the other hand, some automakers aren’t happy about the EV tax breaks going away. However, the impact is relatively minor since there are only about 15 models that qualify. Instead, they’re worried about losing the production tax credits for manufacturing EVs and batteries in the U.S. These are critical for profitably producing EVs.
The Ford CEO also chimed in and said that many of the company’s plans in the Midwest depend on the production credit to continue producing EVs. The factories would have been built in other places if it weren’t for the credits.
The Bigger Picture
As the United States works on making the EV market harder, there seems little doubt that gas-powered new and used cars will be available for a long time. However, the global auto industry sees things a little differently. Some places, like China, have strongly embraced EVs and are leaning into them. The hard part for U.S. companies will be competing with Chinese automakers.
Roughly half of all cars sold in China are EVs. If U.S. companies can’t make EVs profitably, they may lose ground in the global market. Chinese brands are rapidly expanding into other markets, including those in Southeast Asia, Latin America, the Middle East, and Europe.
However, several automakers already have plans in place to develop low-cost EV models, including partnerships to improve global clout.
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Stacy Wilson