How Trump’s Presidency Could Reshape the Future of Tesla and the EV Industry

Colin is an Associate Editor specializing in technology and financial news, with over three years of experience in editing, fact-checking, and proofreading content related to current financial and political events. He holds an M.A. in journalism from The New School and a B.A. in history and political science from McGill University.

Key Insights

• President Donald Trump has pledged to roll back stringent vehicle emissions regulations and reduce government incentives for electric vehicles.
• His relationship with Tesla CEO Elon Musk introduces uncertainty regarding the extent of policy reversals affecting EVs.
• Analysts suggest Detroit’s traditional automakers may gain from a slower electric vehicle transition, while Tesla might benefit if federal EV tax credits are eliminated due to its established profitability.

Donald Trump’s presidency has sparked optimism on Wall Street, fueled by expectations of deregulation and economic growth under his pro-business agenda.

However, the electric vehicle sector faces an uncertain future. Trump’s campaign rhetoric and policy proposals challenge the momentum built by the previous administration to advance electrification. Yet, his close ties with Elon Musk raise questions about how aggressively these changes will be implemented.

Trump’s Stance on Electric Vehicles

Throughout his campaign, Trump criticized electric vehicles as costly and impractical due to limited driving range. He dismissed Biden-era electrification policies as the “Green New Scam,” targeting efforts designed to combat climate change.

He promised to terminate the electric vehicle mandate imposed by the Environmental Protection Agency, which requires automakers to reduce emissions significantly over the next decade.

Trump also argued that these policies harm American jobs, benefiting foreign competitors in China and Mexico.

Anticipated Policy Actions

Trump is expected to eliminate the $7,500 federal EV tax credit, potentially making electric cars less affordable and boosting sales of traditional combustion engine vehicles. This shift could advantage Detroit’s Big Three automakers—Ford, General Motors, and Stellantis—whose gasoline-powered models currently yield higher profits.

Additionally, the EPA under Trump may revoke recent emission standards, easing regulatory pressure on automakers to pursue costly electrification strategies.

Nonetheless, Elon Musk’s influence and a Republican-controlled Congress might preserve some Biden-era investments in EV and battery manufacturing facilities, especially in conservative states.

Industry Winners and Losers

Wedbush analysts recently described a Trump presidency as generally unfavorable for the electric vehicle industry.

Bank of America downgraded Rivian, an electric truck manufacturer, citing regulatory uncertainties that could complicate consumer access to incentives and disrupt credit markets, thereby pressuring profitability.

The future of pure electric manufacturers like Rivian and Tesla heavily depends on regulatory credit sales, which help offset emissions from gas-powered vehicles. Rivian projects $300 million in credit sales this year, while Tesla has already sold over $2 billion in credits in 2023.

Interestingly, Wedbush suggests Tesla could gain an edge without government subsidies due to its scale and established profitability in the EV market.

Moreover, higher tariffs on Chinese imports may protect Tesla’s U.S. market share by limiting competition from lower-cost Chinese EV brands such as BYD and Nio.

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