20/01/25
Viewpoint: Why EVs hold the key to the next US election
London, 20 January (Argus) — While the inauguration of President Donald Trump
may have sent a shudder through the boardrooms of electric vehicle (EV)
producers, boosting the US EV market during his term may be the best way to keep
Republicans in the White House in 2028. President Trump has been highly critical
of the EV market in previous years, and aims to abolish the $7,500 consumer tax
credit for EVs. Despite this, a combination of the Inflation Reduction Act
(IRA), corporate tax breaks, support for Tesla owner Elon Musk and,
counter-intuitively, an oil boom, could herald the start of the good years for
the US EV market. And a Trump administration would be foolish to resist it. IRA
boosts key swing states Donald Trump ran on a manufacturing ticket. Among his
slogans were "drill baby drill" and an evolution of the MAGA tagline: "Make
America Greater Than Ever Before". That second slogan cannot be achieved without
manufacturing the technologies of the future, including EVs, and thanks to
former president Joe Biden those jobs might land in key areas for the 2028
campaign. The US EV market has had a slow start to the latest phase of
expansion, lagging behind as Europe and China boomed in 2022-2023. This changed
last year, as US EV sales in 2024 rose by 7.2pc and totalled 1.3mn, according to
Cox Automotive. Momentum is starting to build. The Inflation Reduction Act (IRA)
passed under Biden's tenure has become a catalyst for EV investment, much of it
in key swing states and red states. This makes it unlikely the Trump
administration will roll back any of the government money allocated to projects
since the IRA was passed. In a study from August 2024, US clean energy
think-tank E2 discovered nearly 60pc of the announced projects under the IRA are
based in Republican congressional districts. Of all new projects, Republican
districts represent 85pc of investment and 68pc of jobs. Of the top 20
congressional districts for clean energy investments, 19 are held by
Republicans. The largest of these investments so far, Toyota's $13.9bn EV
production plant, is in the key swing state North Carolina, which Trump won by a
183,000 vote margin in 2024. The Toyota plant will create up to 5,000 jobs, most
of which are due to start during Trump's second term. wOther swing states have
multiple projects supported by the IRA. Michigan, Georgia, South Carolina, Texas
and North Carolina have over 20, while Ohio, Tennessee, California, New York,
Indiana and Arizona have more than 10. Most of the states with multiple projects
are key marginals which were pivotal for a Trump victory in 2024, except
California and New York. Unfortunately for Biden, the benefits of his flagship
legislation were too late to save the presidency for the Democrats, but they may
benefit Republicans next time around. Big tech and big oil The new Trump
administration is filled with contradictions, which are likely to expand into
open conflict. Nowhere is this more evident than the contrast between interests
of Tesla founder Elon Musk and Trump's "drill baby drill" policy. Although Musk
has rolled back some his more fervent views on climate change, he still supports
a transition to EVs, led by Tesla. His competition in the oil industry have also
started to shift their policies on electrification. Both ExxonMobil and Saudi
Aramco, two leading oil majors, have announced investments into lithium
extraction over the last year.Trump's promised tax cuts and oil licence bonanza
may give them a windfall of cash just at the point that oil executives are
looking to put money into the electric transition. Despite his pro-fossil fuel
rhetoric, Trump may leave office having presided over an increasingly green
America. By Thomas Kavanagh EV sales in the US, by carmaker ('000s) Send
comments and request more information at feedback@argusmedia.com Copyright ©
2025. Argus Media group . All rights reserved.