Tag: Shoppers

In the summer of 2021, before an array of union-made electric vehicles parked by the White House, then-President Joe Biden announced that he was setting an ambitious target: By the year 2035, 50% of new vehicles sold in the U.S. would be battery-powered.

“There’s no turning back,” Biden vowed before taking a joy ride in a plug-in electric Jeep.

Now President Trump is trying to, well, turn back.

“We will revoke the electric vehicle mandate, saving our auto industry and keeping my sacred pledge to our great American auto workers,” he said in his inaugural address. “In other words, you’ll be able to buy the car of your choice.”

One of his first acts in office was to revoke Biden’s 50% EV target.

That target was never enforceable on its own; it served as a signpost for other policies that would have more tangible effects.

Likewise, Trump removing the target doesn’t change anything now. Consumer tax credits are still available; state mandates and federal emissions rules are still in place. That’s because an executive action, on its own, can’t undo or overwrite laws.

But the U-turn is a big, blinking arrow toward where the administration is hoping to go.

Next stop: The agencies

Trump identified his target as the “electric vehicle mandate.” The federal government does not directly require that electric vehicles be sold — but Republicans have argued that regulations to cut vehicle emissions effectively serve as mandates because automakers would face high costs if they did not sell more EVs.

Part of Trump’s roadmap ahead is to revise rules, particularly emissions standards set by the Environmental Protection Agency, but also fuel economy requirements from the National Highway Traffic Safety Administration. All push companies to build more EVs than they would otherwise.

But before any regulations can change, an agency has to propose adjustments. Then, there are mandatory public comment periods, and the agencies are supposed to incorporate the feedback into any changes. That means it will take a few months at least. But Stephanie Brinley, associate director of AutoIntelligence at S&P Global Mobility, says she thinks it’ll be much faster than during the first Trump administration, when it took more than two years to rewrite auto regulations.

“Part of the reason that it can happen faster is simply that the Trump administration’s team knows more than they did last time,” she says.

A crossroads at Congress

The Trump administration has also lambasted subsidies and incentives, like federal tax cuts, that encourage sales and domestic production of EVs, calling them market distortions.

Trump’s executive actions do not affect the availability of EV tax credits; to change those will require an act of Congress. But both the House and Senate are controlled by Republicans, and they’re eager to find ways to save money to balance out the other kinds of tax cuts that Trump has promised. Eliminating EV incentives could help that cause.

That summary makes it sound like reducing EV funding will be easy. That might not be true, because Trump and Republican lawmakers are also keen to promote U.S. manufacturing and jobs. Most of the federal funds for clean energy projects are going into districts that vote Republican — like the emerging battery belt for electric vehicles in the South. And those funds have helped encourage hundreds of billions of dollars of private investment that’s pouring into EV manufacturing.

The Biden administration always sought to tie climate action to U.S. jobs, in part to build a more enduring coalition to support clean energy. Now that strategy will be put to the test, as conservative lawmakers weigh their distaste for the tax credits against the local jobs they’ve helped create.

For example, last week, Rep. John James of Michigan — a Republican and a vocal critic of Biden’s EV policies — celebrated the end of “EV mandates,” saying he was “thrilled.” But he proceeded to ask that the House of Representatives “proceed with caution” when it came to rolling back manufacturing and energy tax credits, noting that job creators in his district and around the country are relying on them.

James repeated a line many Republican lawmakers have used in reference to the Inflation Reduction Act, the Biden administration’s capstone climate legislation, calling for a “scalpel,” instead of a sledgehammer or chainsaw, to dismantle it.

Which incentives will be spared the scalpel? Expect some intense negotiations.

A detour through the courts 

Some of Trump’s first-day executive orders do have material impacts on the EV industry. He froze the disbursement of funds that were set aside to build new EV chargers, for instance.

It was widely expected that Trump would not fund any more projects once he was in office, which was why the Biden administration was motivated to get money out the door near the end of his term. According to Atlas Public Policy, which closely tracks EV-related incentives, about two-thirds of federal funds for highway chargers have been allocated to states, and 72% of grants for community chargers have been awarded.

Some of that money is already spent. But some has been promised and not yet delivered. How much can Trump block?

“It’s a legal question that’s going to have to be answered by the courts,” says Levi McAllister, a partner at the law firm Morgan Lewis and the head of its EV working group.

Several companies are building federally funded EV chargers, including chains of travel stops that want to add EVs alongside their gas stations. At least one of them now says that they’re waiting for the administration’s next move.

Kim Okafor, general manager of zero emissions for the travel stop chain Love’s, told NPR in a statement, “Love’s will continue to monitor related executive orders and subsequent changes in law to determine the next steps.”

Meanwhile Pilot, another travel center company that received significant funding for chargers, says it tried to anticipate that government programs could change, and that it still plans to build out its EV network.

There’s uncertainty about more than just charger funding. Many other elements of Trump’s EV roadmap will ultimately be up to the courts. That includes an anticipated fight between Trump and California over that state’s influential EV requirements. Those policies call for 100% of new vehicles to be zero-emission (including plug-in hybrids) by 2035, and have been adopted by other states. California’s authority to set such rules is unique, and Trump has ordered federal agencies to terminate state policies that would limit gas vehicle sales.  

Trump’s order is expected to trigger a legal battle. Speaking to investors on Tuesday, General Motors CEO Mary Barra said that California’s regulations will be changing, in part because market conditions mean they’re not feasible — but that whether Trump’s executive action means they’re entirely void is simply not clear.

“We’re very clear on the direction, but I don’t think we can, as an auto manufacturer right now … assume that that is gone at this precise moment,” she said.

Final destination? 

Trump’s orders on EVs emphasize consumer choice. And that’s just fine with the auto industry, which has welcomed the prospect of easing regulations.

“There’s a saying in the auto business: you can’t get ahead of the customer,” John Bozzella, the president of the trade group representing automakers, said in a statement responding to Trump’s first-day action.

The flip side is that you don’t want to get behind the customer, either.

“Let’s say they roll back everything,” says Levi McAllister, the lawyer. “The question still remains: Is there a demand for these products? And if there is, there will be manufacturing for those products.”

Right now, EVs make up about 10% of U.S. sales. And according to JD Power’s Elizabeth Krear, the percentage of new vehicle shoppers who say they’re “very interested” in buying an EV recently reached a two-year high of 29%. Automakers like Ford and GM have argued that because EVs are fun to drive and cheaper to own, they’ll eventually win over a larger chunk of shoppers.

At the same time, car companies also have to consider regulations in other countries, where political leaders remain concerned about the consequences of catastrophic global warming. Electric vehicles have a significantly smaller carbon footprint than gas-powered vehicles, and are a key element of the global plan to fight climate change.

“The global stage is still moving in this direction,” says Stephanie Brinley, the S&P analyst. “So automakers still have to develop the technology … because they’re going to have to sell it somewhere else.”

A vote of confidence in critical minerals 

For most of the EV supply chain, the road ahead is full of uncertainty, with the Trump administration angling to roll back a whole suite of supportive policies.

But there’s one corner of the supply chain where Trump signaled he’d stay the course: the raw materials for EV batteries. Currently, China dominates the mining and processing of many critical minerals. Building a domestic supply chain was an economic and national security imperative for Biden — so too, for Trump. In his executive orders on energy, Trump specifically named critical minerals as a national priority that deserves federal funding.

Rhyolite Ridge, a massive lithium project in Nevada being developed by the company Ioneer, received a government loan for nearly a billion dollars in the final days of the Biden administration. Bernard Rowe, the company’s managing director, points out that Barack Obama was president when they drilled the project’s first hole.

“We’ve been through four administrations during that time,” he says. “And what I would say is that fortunately, we’ve enjoyed very strong bipartisan support for these critical minerals supply chains right through those four administrations.”

David Klanecky, of the battery recycling company Cirba Solutions, is similarly bullish about Trump’s support for the minerals. But he adds a caveat. “I think there’s a little bit of a conundrum that’s occurring,” he says, arguing that the entire supply chain needs to be supported if the goal is to compete with China and build American jobs.

“I think it’s great that they’re supportive of critical minerals, but if there’s no one buying vehicles or using batteries, like, you don’t need the critical minerals,” he says. “It’s a two-sided story.”