Is the EV industry in the U.S. dead?

Nearly a week after Donald Trump became President-elect for his second term as President of the United States, I think we can start to get a clearer picture of what Trump’s second term will look like in regards to EVs and electrification, and where the industry will go from here.

Is the industry dead?

No.

Many automakers who build EVs also have a complete lineup of gasoline-powered vehicles. Those vehicles are built in the United States. Even if EV adoption slows to a glacial pace, or stops entirely, the companies that have invested in EV development aren’t going to magically go out of business. If things return to somewhat normal following Trump’s second term, those companies will be poised to make a comeback.

In some cases, these automakers are even building EVs in the United States and I don’t know a single governor who wants to have manufacturing cease in their states. Here in Ohio, Honda is building an EV Hub that’ll build a variety of different BEVs and I can’t imagine Governor DeWine saying, “yeah, close up shop.” Even if all of his public policy decisions don’t support EV adoption, when his feet are to the fire a bunch of unemployed constituents isn’t how you win re-election.

Hyundai, for example, has two massive manufacturing plants here in the United States. The company is diversified enough to survive an EV downturn, but also the governors of Alabama and Georgia aren’t going to want Hyundai to move production elsewhere or cause massive unemployment.

The EV-only manufacturers might be in bigger trouble, except for Tesla, since they don’t have a diversified lineup. Rivian, Lucid, and even the upcoming Scout Motors might have a more difficult time selling their wares if the federal incentive goes away. Rivian just had a bad quarter already, and while they aren’t heading the way of Fisker right now, these companies don’t need the extra downward pressure.

Hellcat all the things?

Will automakers just go back to putting inexpensive, big gasoline-guzzlers into all their cars since there’ll be little federal regulation to stop them from doing so? It would depend on how well the concept of federalism survives.

Right now, California has the right to set its own emissions standards and push forward its regulation on vehicles sold in its state. California, by itself, is the world’s 5th largest economy. The state carries a huge amount of weight, and the political power to make things happen. Automakers, looking to save the most amount of money, won’t engineer a vehicle that they can only sell in part of the country, and then develop a different version that only sells in other parts of the country.

Assuming the current ZEV states continue to follow California’s lead, a car that you can only sell in 30ish states out of 50 is economically stupid. Automakers will continue to make a car they can sell in California — because again, 5th largest economy — so even if there are no environmental guardrails at the federal level automakers aren’t going to “go back.”

If the federal government decides that states rights are stupid, California could lose its power to set emissions targets. In that case, I still wouldn’t expect California to back down. Governor Newsom has already recalled the state legislature into an emergency session to help insulate Californians from whatever action the Trump administration plans on taking, including preparing lawsuits protecting California’s rules on zero emission vehicles.

Some wild rumors are swirling that Newsom will attempt to withhold California’s tax payment to the U.S. government. While it’s not something that makes any sense right now, it is clear Newsom will use whatever leverage he has and that leverage could eventually include this. Nothing really would surprise me anymore.

What is likely to happen?

It’s pretty safe to assume that federal EPA protections will likely vanish under the Trump presidency. Additionally, overturning the Chevron Doctrine will make it even easier for political appointees to make decisions on regulations. If Trump appoints Elon Musk to a role to cut government spending, most regulatory agencies will cease to exist.

Additionally, expect federal tax incentives for EVs to go away. Tesla doesn’t currently need them to sell its cars — it makes most of its money on selling credits — other automakers might have a difficult time being able to price EVs affordably. Some states, like California, might step up and increase incentives at the state level, but I would expect EV adoption to slow pretty dramatically.

Some automakers might be able to lower EV prices to stay competitive with gasoline alternatives without incentives, but that would cut hugely into company profits. It’s likely unsustainable for EV-only companies, but it’s hard to know quite at this point.

That’s all before you factor in tariffs on all imported items, potentially even those from trade agreement countries, driving the price of quite literally everything up.

The only certainty is that if you were thinking about buying an EV, you probably should do it sooner than later. Take advantage of any incentives that are currently available, and get in before the cost of goods increases across the board. EVs are a great choice for buyers, not just for environmental reasons, but because of low cost to operate and maintain, and excellent performance.