Excerpts from Automotive News, 6 November 2024
As president, Donald Trump may take steps to further isolate Chinese vehicle and parts manufacturers to protect the domestic supply chain.
The new administration can be expected to target Biden-era tax credits, to the detriment of manufacturers that have invested heavily in new electric drivetrains– key for the domestic industry’s long-term survival in the global market.
– will likely send the automotive industry into a period of uncertainty on electric vehicle regulations, incentives and trade.
– might loosen stringent requirements and take the pressure off vehicle manufacturers sprinting to keep up with the Biden administration’s aggressive electrification timeline.
– additional tariffs on foreign component manufacturers would also lead to higher vehicle costs, further straining demand.
– polarized politics and flip-flopping priorities are besetting an industry in the midst of an enormous transition.
– complexities within the new administration include open hostility toward the electric transition and a cozy relationship with Tesla CEO Elon Musk– shuttering of a federal loan office meant to enable a domestic supply chain and projected trade policies to shut out China could raise expenses for vehicle manufacturers.
– Musk said in October he hoped to use the advisory role to cut $2 trillion out of the federal budget– a 30 percent reduction over fiscal year 2024.
Blow to UAW?
– Musk also said he would use his influence to push federal standards for autonomous vehicles, rather than relying on the current state-by-state approach.
– Trump’s victory could be a seen as a blow to UAW President Shawn Fain’s influence among union members.
– Union leaders estimated that about 30 percent of members voted for Trump in the 2016 election.
– Fain was hoping to persuade a larger percentage of them, particularly in Michigan and other Midwestern battleground states, to come out for Harris.
– it’s unclear how the union vote split in this election, Fain will have to reconcile with the portion of the rank and file that voted for Trump.
– Fain will also face a contentious relationship with the president-elect as he prepares for his own reelection campaign in 2026.
– Trump will again have the power to fill vacancies within the National Labor Relations Board, which under the Biden administration took more worker-friendly positions.
– the U.S.-Mexico-Canada trade agreement, which Fain has opposed, will be up for review in 2026.
Trump’s impact on the electric vehicle transition
– Trump’s rhetoric and prior policy decisions on electrification indicate that a Republican administration will begin an anti-regulatory effort designed to ease the burden on automakers and reduce funding for incentives.
– it’s unclear whether significant changes could come to the Inflation Reduction Act. Trump, without congressional control, still can revisit the act’s implementation guidelines, including those for the individual tax credit (up to $7500), commercial vehicle tax credit and used clean vehicle tax credit.
– the new administration may also seek to delay light-vehicle emissions regulations set to come into meaningful effect after the 2028 model year, which would also delay regulations for post-2032 model years — as well as eliminate California’s ability to set its own standards.
– Karoline Leavitt, the Trump campaign’s national press secretary, said this year that California’s waiver to set its own greenhouse gas emissions rules would be “immediately revoked” upon Trump taking office.
– However, Cummins Inc., Daimler Truck North America, Ford Motor Co., General Motors, Hino Motors Ltd., Isuzu Technical Center of America Inc., International Motors (formerly Navistar Inc.), Paccar Inc., Stellantis, Volvo Group North America and the Truck and Engine Manufacturers Association have all promised to meet California’s more stringent zero-emissions requirements, a major driver of industry innovation in clean transportation.
– the District of Columbia and 17 states follow all or parts of California’s automotive emissions regulations, but Republican attorneys general are suing to eliminate the waiver.
– the government is also in the midst of establishing a federal charging standard and rolling out funding for the National Electric Vehicle Infrastructure program. It’s not clear how those initiatives will fare under Trump.
Trump’s approach to trade and China
– Trump might also implement trade actions that expand on President Joe Biden’s steep Chinese EV tariffs and proposed rulemaking restricting the import of Chinese connected-vehicle technology.
– also new tariffs on battery components and silicon providers, targeting Chinese imports. Trump could also expand the Uyghur Forced Labor Prevention Act by adding battery companies, including CATL, to the enforcement entity list.
– While those actions are designed to undercut China’s manufacturing dominance, they might also punish American companies with higher costs for already pricey EV batteries — margins made thinner by an elimination of the EV tax credit.