With less than a month to go, Tage Erikson asked the experts what difference a Trump or Harris presidency might mean for the EV battery industry.
Most US and foreign experts agree: The EV revolution is here to stay, regardless of whether Kamala Harris or Donald Trump wins the race on 5 November. Only the pace of the energy transition will be different. The next four years will most probably be dominated by a tug-of-war between the Congress majority and the new president.
The US has entered a new era in the last four years. The number of BEVs has grown rapidly, although the commercial vehicles’ market lags behind. Tesla has been very successful, but General Motors, Stellantis and Ford have launched ambitious battery and EV projects, often with South Korean and Japanese partners.
The Biden administration introduced major legislation, the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL). BIL offers support of $35/kWh for domestic battery cells and $10/kWh for each battery module plus tax credits for critical battery chemicals produced in the US. The target is that 100% of all battery components and 80% of critical materials should be US produced in 2029.
Geopolitics at play
Texas-based global energy market analyst Aurora Energy Research released analysis in September on how a Trump victory might slow the clean energy transition through major cuts to funding allocated to clean technology under the IRA.
Meanwhile, UK research and consulting company Rho Motion recently arranged a webinar with invited specialists, Andrew Wishnia from EpicWork Advisors and Bryan Bille, principal policy analyst at Benchmark Mineral Intelligence.
Both analysts think geopolitical factors will continue to affect the EV and battery markets.
Aurora’s study finds that Trump is likely to have limited success in achieving his campaign’s stated goals, while a Harris administration would largely represent a continuation of current trends.
Rules on fleet emissions
Experts Will Roberts and Iola Hughes from Rho Motion said the environmental rules on fleet emissions are likely to be changed by a Trump administration. This happened after Trump’s victory in 2016, when the limit was increased from 163g/mile to 202g/mile. President Biden reduced the limit to 161g/mile for the period 2022–26 and further to 85g/mile for 2027–32, creating a strong incentive for more EVs on the roads of America.
With Trump, a status quo of 161g/mile or more is expected, they said. This leads to the conclusion that the planned high level of vehicle electrification cannot be reached in the US under a Trump presidency.
The number of EVs sold will increase under either president, but considerably slower under Trump. The difference would be 1.5 million vehicles annually, the webinar heard.
The first IRA Foreign Entity of Concern (FEOC) restriction on battery imports was applied in January 2024. FEOC countries are China, Russia, Iran and North Korea. The 100% tariff on EVs made in China was another protective measure from the Biden administration. Since the beginning of President Biden’s term, companies have announced well over $100 billion in manufacturing investments to develop the US battery supply chain. In 2040 EV battery sales would be reduced by 47% after a Trump victory, according to the Rho experts.
Antipoles will cause market disturbance
A Trump-controlled Congress would make changes to both IRA and BIL, but Lizzie Bonahoom, associate in the pan-US team at Aurora Energy Research, said: “Many trends we can expect to continue regardless of which candidate takes office next January – oil and gas production will continue to rise, renewables will continue to make up a growing portion of the power supply, and coal plants will continue to age and retire. If either administration makes energy a top priority, it will be hard to pass meaningful legislation without a House majority and Senate super-majority.
Trump has stated the intention to ‘gut’ the IRA, and members of the conservative ‘America First Policy Institute’ have said that changes to the IRA would be a ‘Day 1’ issue for a Republican or Trump presidency.
The Aurora study also evaluates effects from the more extreme ‘Project 2025’ scenario. A Trump administration, under pressure to finance a massive $4.6 trillion extension of 2017 tax cuts, would ignore opposition from red state communities who have benefitted from IRA incentives and instead move to scrap tax credits for solar, wind and batteries from 2025, it thinks.
This would result in a much more significant slowdown in the pace of the energy transition, with 200GW fewer renewables and battery projects by 2040, it said. However, this may not prove popular with consumers, since fewer renewables would lead to an increase in wholesale power prices by up to 22% in the most impacted regions like Texas.
Benchmark Minerals pointed out that with the push of the IRA, Republican states have received billions in clean energy funding and added thousands of clean energy jobs. Disassembling the driver of these positive economic outcomes in the so-called ‘battery belt’ would present some obvious political risks for lawmakers.
While a new president could not claw back designated funds (for example, for the Department of Energy (DOE) loans and grants programme or the budgeting allocations for tax credits), a new president could select a head of the DOE who could elect not to sign off on new grants and loans, it said.
Wishnia added there are hundreds of millions of non-governmental dollars to fund investments in EV technology and even Trump will also support domestic mining of battery raw materials.
The prevailing trend is that both Chinese and US companies will establish plants in Mexico to supply the US and Latin America markets with cheaper EVs and batteries – which is on the radar of the US government. The support offered by BIL is still attractive to keep production within US borders.
The South Korean law firm Shin & Kim said that it is highly likely that more stringent screening by the governmental Committee on Foreign Investment in the United States (CFIUS) will be conducted on investments in the US by companies with direct or indirect ties to China. Since Korean EV battery companies have close ties to China, their investments in the US could face a more stringent CFIUS review process and may be negatively impacted.
