According to Bloomberg, the slowdown in the popularity of electric cars in the United States may be further exacerbated by the fact that the next President of the United States, Donald Trump, has promised to repeal the electric vehicle tax credit. GlobalData, an automotive forecaster, has lowered its estimate of U.S. EV market share in 2030 from 33 percent to 28 percent.
Jeff Schuster, GlobalData's vice president of automotive research, said in a report, "The U.S. transition to electric vehicles will be hampered under the Trump administration." He said Trump's focus on lowering gas prices and relaxing tailpipe emission standards may reduce the market share of electric vehicles by "15 to 20 percent."
Currently, automakers have invested billions of dollars in batteries and EV factories to roll out more electric vehicles, which will be increasingly required under U.S. regulations on vehicle efficiency and tailpipe emissions.
However, Mark Wakefield, global head of automotive at consulting firm AlixPartners, said about $129 billion worth of EV investment in North America is "at risk" through 2027. The $7,500 tax credit available to consumers for purchasing North American-built electric vehicles could also be in jeopardy.
The electric car market is certainly going to be a lot smaller five years from now," said Mark Wakefield. The number of electric cars produced by factories will be on a long-term decline. Automakers will continue to slow investment in electric vehicles and delay or cancel the launch of new pure electric models."
Automakers will also look to increase production of more profitable gasoline models while converting EV plants into production facilities that can also produce hybrid vehicles. Volkswagen Group, for example, is in the process of remodeling its new $2 billion electric car plant in South Carolina, USA.
This is a challenge from a profitability standpoint because a lot of the industry plans that are being developed for electric vehicles are assuming production volumes that are not meeting expectations," said Mark Wakefield. As a result, some plants may be converted to hybrid vehicle plants in order to produce both hybrids and pure electric vehicles, rather than just pure electric vehicles."
However, Trump will also face difficulties in actually overturning the Inflation Reduction Act, which has fueled a construction boom of electric car and battery plants, many of which are located in Republican-leaning states, Mark Wakefield said, adding that fuel economy regulations, by contrast, could change even more dramatically. Trump relaxed fuel economy regulations in his first term and promised to eliminate what he called "electric vehicle mandates" on the first day of his second term, but changing those policies is a long process that could take months or even years.