Here’s why the 2024 US election looks like a referendum on electric vehicles.
When Donald Trump gave his victory speech after the Iowa caucuses, the front-runner in the 2024 Republican presidential primary couldn’t resist taking a shot at an electric car while praising a supporter from Missouri.
The supporter “came from not too far away, Missouri. But you can’t drive an electric car that far.” The former president said he brought laughter to the audience in Des Moines Monday night.
This is the type of criticism of electric vehicles that President Trump frequently presented during his campaign for the 2024 White House, and shows a clear rejection of President Joe Biden’s approach. The Democratic incumbent has made his support for EV DRIV KARS a key part of his speech and economic policy, saying the future of the auto industry “is electric and there is no turning back.”
MarketWatch Archives (September 2023): Trump attacks Biden over EVs while pitching to auto workers.
Therefore, the results of the 2024 presidential election, in which a Biden-Trump rematch is expected to be likely, are expected to have a significant impact on the Biden administration’s incentives and regulations to promote the introduction of electric vehicles. The election was described as a “referendum” on EVs by analysts at Beacon Policy Advisors. While they acknowledge that the issue will not attract voters as much as top topics like inflation or abortion rights.
“People won’t necessarily vote, but the future of EVs will largely depend on the election and what happens in 2024,” said Beacon analyst Maxwell Shulman.
There are expectations that a widely used tax credit that could reduce the cost of a new EV by up to $7,500 will be targeted by Trump or a Republican president. This is especially true if Republicans retain control of the U.S. House of Representatives and take back the Senate. . Credit has already been reduced since January 1, with some car models suffering losses due to new anti-China rules on battery materials. After the 2024 election, this amount could be reduced even further, as a Democratic-run Congress may also support closing the “rent loophole.”
Washington will have to decide in 2025 how much of Trump’s 2017 tax reform plan to extend or allow to expire. If Republicans control the White House and both houses of Congress, they will likely look at the EV credits established by Biden’s inflation reduction law along the way, Beacon’s Shulman said.
“If you’re going to cut taxes, you have to offset the revenue somewhere, and what better than the major legislative package that our opponents passed the previous term?” he said
Related: As Biden touts the inflation reduction law, analysts weigh how Trump will repeal it.
Courtney Rosenberger Gelman, managing director of policy research at Strategas Securities, said the EV tax credit is the “most at risk” part of Biden’s inflation reduction law if Republicans win the 2024 elections. She said she thinks it’s going too far to say this fall’s U.S. vote looks like a referendum on EVs, but that it has the potential to have an impact on the growing industry.
Democratic control of one of the chambers of Congress could prevent the EV tax credit from being completely revoked, but there could still be changes, according to Gelman. “Even for Democrats, there may be additional sourcing requirements because of the bipartisanship going after China,” she said. And “as both sides continue to build populist momentum, they can target things like rental loopholes,” she said.
This loophole represents a way for drivers to get $7,500 off an EV at any price if they lease it, with no restrictions on the driver’s income level. For purchases rather than leases, the subsidies are subject to more rules, including North American sourcing as well as a $150,000 income limit for individual tax filers purchasing a new vehicle.
In addition to the EV tax credit, Beacon’s Shulman expects the Republican administration will aim to roll back Biden regulations, such as proposed emissions rules to push up to two out of every three new passenger cars sold into electric options. In the U.S. until 2032.
The Republican-run House of Representatives passed legislation on the exact issue last December, with Republicans describing Biden’s rule as an EV mandate, but it is not expected to find any traction in the Democratic-controlled Senate this year.
If these regulations are repealed in 2025, prospects for the growth of the electric vehicle industry will have to be lowered. Because not only is the carrot or the subsidy gone, but the stick that forces the industry to do that is sort of removed as well. said Shulman.
Companies ‘won’t be able to make long-term investment plans’
EVs’ share of U.S. auto sales is expected to increase from 6.9% in the first 11 months of 2023 to 8% in 2024, according to Jessica Caldwell, director of insights at Edmunds. She explains that the car market is experiencing a “wake-up call” after initial predictions proved too optimistic, with the country suffering from rising interest rates on car loans.
Losing the $7,500 EV tax credit would be a huge blow to the industry, she said, especially since buyers are no longer likely to be early adopters. “That will definitely have an impact, because if we target a more mass-market consumer, that person typically has a lower income level than the early adopters.”
Related: Hertz cites weak demand and high impairment costs in its decision to scale back its EV fleet.
The automaker and its allies said they were tracking political risks. Stellantis STLA, CEO of Chrysler and parent company of Fiat.
Carlos Tavares recently told Automobilwoche that the US elections are important and that his company may have to change its strategy if “political and public opinion tend to reduce EVs.” In a similar vein, General Motors (GM) executives also
And Nissan 7201,
Removing the incentive would hurt EV sales, he told the Financial Times.
“My biggest concern on behalf of corporate America is the lack of certainty,” Suzanne Clark, president and CEO of the U.S. Chamber of Commerce, said at a news conference last week when asked about repealing some of the inflation-reducing policies. . action.
“When we see major changes between guardrails every two to four years, it means companies are saying, ‘I don’t know how to invest in America.’ ‘I can’t make long-term investment plans.’”
Related: Ray Dalio: Trump and Biden are both threats to the market
Voters Show Large Partisan Divide on EVs
While there is a war of words between Biden and Trump over EVs, there also appears to be a partisan divide between rank-and-file Democrats and Republicans over these products.
According to a Gallup poll conducted last year, about 71% of Republican voters said they would not purchase an electric car. Only 17% of Democrats think that way, as do 38% of independent voters.
To be sure, Gallup notes that Americans are not always the best at predicting what they will buy, as nearly a quarter of respondents to a 2000 survey said they would never buy a cell phone. Moreover, an E&E News tally last year found that members of Congress who own EVs are overwhelmingly Democratic. Republican Rep. Thomas Massie of Kentucky said he was the first U.S. member of Congress to have a Tesla TSLA.
On Capitol Hill 10 years ago while purchasing one of Elon Musk’s products.
Still, what does the party split on EVs offer?
“I think it generally comes down to partisan views on energy XLE. Republicans are generally more friendly to fossil fuels RB00.
The Democratic Party has generally been viewed as anti-drilling and anti-oil.
I’m anti-coal,” said Strategas’ Gelman.
Green energy stock ICLN could end up tracking Democratic prospects in the 2024 election, according to Gelman.
“We’re going to see EVs and other renewable energy names potentially trading for the possibility of Republicans and Democrats doing well in the election,” she said. She noted that her own store has noticed that type of relationship ahead of the 2022 midterm elections, as seen in her chart above.
Now read: Want to buy a new car? I probably need to make $100,000 a year.
