What will Donald Trump's presidency mean for electric vehicles?

A new president – with a close ally who is a big deal in the EV space – could signal a shift in policy.

Electric vehicles are set to be our future. They’re touted as the technology of tomorrow, with governments incentivising their use in order to try and achieve ambitious carbon and emissions reduction goals. That’s the establishment view, backed by successive US presidents and scores of other world leaders.

But Donald Trump, who won the US presidential election in November with a thumping electoral college victory over Kamala Harris, has made his name and reputation by not being anything like an establishment figure. With that in mind, the future of the electric vehicle (EV) industry under a Trump presidency remains a big unknown.

Pro-EVs?

One factor that could bode well for electric vehicle manufacturers is the self-styled “first buddy” and his proximity to the president-elect. Elon Musk helped propel Trump to the White House and is the CEO of Tesla, one of the world’s leading EV companies. He will likely have Trump's ear to convince the president of their importance once he takes office in January.

What’s more, the specific type of EVs that Tesla wants to build and sell – autonomous, self-driving vehicles – could be boosted by Trump’s presidency and Musk’s importance to it.

“The golden goose for Tesla remains a fast-tracked autonomous strategy which we fully expect under Trump, and we estimate it’s worth a $1 trillion of valuation alone to the Tesla story over the coming years,” says Dan Ives, principal analyst at Wedbush Securities.

However, there are wrinkles to this vision of the future under Donald Trump, and the idea that he’ll go all-in for EVs is far from a settled belief.

“We think the area where we will see the most noticeable change from the prior administration will be on the environmental regulatory framework, which we expect to soften,” say researchers at Bank of America Securities, who believe that EVs could see a “challenged” market.

At the same time, traditional auto manufacturers could benefit from a less pressing need to bring down carbon emissions in the US.

Anti-EVs?

This would mean fewer people would feel the need to buy electric vehicles under a Trump administration, partly because they may not feel as pressured to avoid environmental taxes that could have come in under a Kamala Harris administration.

Given that EVs are currently more expensive than their internal combustion engine (ICE) counterparts, even with generous discounts and rebates available at state and federal levels, it would be a no-brainer for buyers to stick with gas-guzzling vehicles rather than take a gamble on a less-tested, more-expensive technology.

As researchers at Bank of America put it, “Lower regulatory pressure on legacy OEMs will enable a more stable production environment given that OEMs will choose the production mix that most suits market demand and their profit function rather than chasing compliance.”

The bank doesn’t see downward pressure on EV sales for at least three years, but the picture beyond 2027 is less certain, they claim.

Of course, the personal interplay between the president-elect and Elon Musk could help sway the former’s opinions in favor of EVs once more. But both are highly combustible personalities, and both are alpha males who like to be seen to be in charge.

Whether the two will still be on speaking terms by the time Donald Trump is sworn into office is not a guarantee, and any fallout could be costly to Musk and the wider EV industry, given Trump is known to hold a grudge – and Musk is so closely tied with the industry at a national and international scale.