If President Trump has his way, the auto industry’s transition to electric vehicles could soon be reversed. He would eliminate tax credits for electric-vehicle purchases, federal grants for chargers, and subsidies and loans to help rebuild assembly lines and build battery factories.
The executive orders issued by Mr. Trump on Inauguration Day are similar to his broad rejection of the centerpiece of former President Joseph R. Biden Jr.’s multibillion-dollar program to address climate change, which Republicans campaigned on to ban gasoline cars. Presented as.
The orders also present a challenge for automakers that have invested billions of dollars in electric vehicles, partly because the Biden administration has encouraged them. But some orders appear to bypass Congress or federal rule-making processes, which could make them vulnerable to lawsuits and even resistance from within the Republican Party.
Analysts say the orders, designed as a way to revive the American auto industry, could cause American carmakers to scale back their electric-vehicle programs while Asian and European automakers continue to improve the technology. Already, 50 percent of car sales in China are electric or plug-in hybrid, and Chinese automakers like BYD are selling more cars worldwide, driving customers away from established car companies, including American makers.
An executive order titled “Unleashing American Energy” and signed by the president on Monday directs federal agencies to immediately stop distributing funds allocated by Congress, which was part of a Biden effort to push the auto industry toward vehicles with no tailpipe emissions .
Among other things, the fund helped states install fast chargers on major highways and provided tax credits of up to $7,500 to buyers of new electric vehicles and $4,000 to buyers of used models. The credit effectively made the cost of purchasing some electric cars equal to the prices of cars with gasoline or diesel engines.
Mr Trump also rescinded Biden’s ambitious executive order that called for 50 percent of new vehicles sold in 2030 to be fully electric, plug-in hybrids or run on hydrogen fuel cells.
And Mr. Trump said the administration would try to revoke California’s right to set air-quality standards that are stricter than federal rules. This will have a wide impact. California aims to have 100 percent of new cars sold electric by 2035, and some of its standards have been copied by at least 17 other states.
“The impact will be significant,” said Shay Natarajan, partner at Mobility Impact Partners, a private equity firm that invests in sustainable transportation.
He said if demand for electric vehicles surges, as has happened in other countries like Germany where incentives have been cut, carmakers could be left with expensive, underutilized electric-vehicle and battery factories. .
“Access to federal funding for EV and battery manufacturing will become more difficult, increasing the risk of stranded capital for manufacturing projects already underway,” Ms. Natarajan said in an email.
Representatives of the fossil-fuel industry celebrated the president’s action, while environmentalists lamented what they said was a serious blow to efforts to cut greenhouse gas emissions and reduce urban air pollution caused by cars.
“This is a new day for American energy,” Mike Somers, president of the American Petroleum Institute, said in a statement, “and we applaud President Trump for moving quickly on a new path where American oil and natural gas will be Is adopted. not restricted.”
Katherine Garcia, transportation expert at the Sierra Club, said: “Rolling back vehicle emissions safeguards hurts our health, our wallets and our climate. We will fight him at every turn of the road.”
But the ultimate impact may not be as sweeping as the strong language in Mr. Trump’s executive orders suggests.
The funding to encourage electric-vehicle sales and manufacturing was included in the law that the President cannot unilaterally rescind. Mr. Trump also cannot rescind the rules that the Treasury Department and other government agencies established to determine how money will be disbursed with a mere stroke of a pen. Any attempt to short-circuit the laborious process of proposing new rules, which also includes soliciting comments from the public, will almost certainly invite credible legal challenges.
The Energy Department has agreed to lend billions of dollars to carmakers like Rivian, which will get $6 billion for a factory near Atlanta to produce electric sport utility vehicles. The loan agreements, some of which were finalized in the final days of the Biden administration, are binding contracts.
Most of the money has flowed into congressional districts in states like Georgia, Ohio, South Carolina and Tennessee where Republicans dominate local politics. Their representatives may hesitate to repeal laws that have brought jobs and investment to their districts. This is a challenge for Republican leaders struggling between slim majorities in the House and Senate.
Ultimately, individuals and families will decide which car they buy. Electric vehicles and plug-in hybrids are gaining market share not only because of subsidies, but also because they offer faster acceleration and lower fuel costs. The share of cars running on fossil fuels is declining, although the situation could change if financial incentives for battery-powered cars and trucks are removed.
The sudden change in political direction creates a dilemma for automakers. Some may welcome the president’s promise to repeal emissions and air-quality standards that force manufacturers to sell more electric cars than they wish to. But at a time when most people are struggling to make or increase profits, eliminating federal subsidies could disrupt their financial plans.
There is uncertainty over the status of electric-vehicle policies and the threat is heightened by the president’s promise to impose 25 percent tariffs on goods from Canada and Mexico, which are major suppliers of cars and car parts to the United States.
“Tariffs on assembled vehicles or parts at this level would shatter the U.S. auto industry,” Carl Weinberg, chief economist at High Frequency Economics, said in a note to clients Tuesday.
Some carmakers seemed appreciative of the President’s actions, while others were reluctant.
“President Trump’s clear focus on policies that support a strong and competitive manufacturing base in the United States is extremely positive,” Stellantis, which owns Dodge, Jeep, RAM, Chrysler and other brands, said in a statement.
General Motors Chief Executive Mary T. Barra congratulated Mr. Trump at the X on Monday and said the company “looks forward to working together on our shared goal of a stronger American automotive industry.”
There is no sign that Elon Musk – Tesla’s chief executive and head of what Mr Trump is calling the Department of Government Efficiency – is using his influence to blunt the attack on electric vehicles. Tesla owns slightly less than half of the electric cars sold in the United States, and nearly all of its vehicles qualify for a $7,500 tax credit.
Of the 16 cars and trucks that can be purchased with the help of that tax break, four are made by Tesla. GM is the only automaker with more than five eligible models. No other company has more than two qualifying vehicles.
Mr Musk has previously said the government should get rid of all subsidies and Tesla would suffer less than other automakers. But analysts say Tesla’s sales and profits would be hit hard if Mr. Trump successfully repeals or cuts electric-vehicle tax credits, California’s clean air rebates and other such policies.
Tesla did not respond to a request for comment.
During an appearance before Trump supporters in Washington on Monday, Mr Musk, who is also the chief executive of SpaceX, expressed delight that the president had promised to send astronauts to Mars. “Can you imagine how amazing it would be to have astronauts raise a flag on another planet for the first time?” Mr Musk said. He did not mention cars.