TL/DR –
Donald Trump’s election as the 47th US President is expected to bring changes to the landmark Infrastructure Reconciliation Act (IRA), a centerpiece of President Biden’s economic achievements. It is anticipated that a future Trump administration will target tax credits and incentives, including those for electric vehicles, created under the IRA, and roll back or eliminate standards for EVs under the Environment Protect Agency. Changes to tax credits could also affect consumers, with the IRA’s mechanism to transfer the 30D clean vehicle credit to registered dealers for an upfront discount at the point of sale potentially being rolled back or eliminated.
Trump Presidential Impact on IRA and EV Industry
With Trump elected as the 47th President, Joe Biden’s economic plans are expected to undergo significant changes. There is speculation that Trump will target tax credits and incentives formed by the IRA, including those for electric vehicles (EV).
The IRA directs over $369 billion toward sustainable job creation, aiming to cut emissions by 40% by 2030. It is considered historic legislation for decarbonization and sustainable practices. Trump’s potential changes could see a huge setback for industries dependent on grants and loans from the IRA.
Trump declared his plan to “terminate the Green New Deal” to combat inflation during a speech to the Economic Club of New York. This implies he may rescind unspent funds under the IRA, affecting critical minerals projects and new technology developments.
Trump’s administration is likely to slow down the push for EVs. Trump expressed during his campaign that he would “end the EV mandate on day one.” This places the Department of Energy’s grant program, tax credits, and other incentives for batteries and EV manufacturers at risk.
Industry experts suggest that these changes could have widespread implications for the battery raw materials supply chain. Changes to credits would also affect consumers. The IRA created a mechanism to transfer the clean vehicle credit to registered dealers, giving consumers an upfront discount and extending the credit reach.
Impact on EV Standards and Tariffs
Trump has mentioned plans to roll back or eliminate EV standards under the Environment Protect Agency (EPA). This could ease pressure on major auto manufacturers such as Ford, General Motors, and Stellantis to shift their production lines to EVs. However, it could also put the US at a disadvantage as foreign competitors continue to innovate and produce EVs.
The question of tariffs, another key policy area for Trump, will also come into play. Stocks in Mercedes-Benz, Porsche, and BMW fell sharply following the election result announcement, hinting at potential higher tariffs on foreign-made cars.
Foreign Entity of Concern
Another area of focus could be sourcing requirements related to FEOC. The expectation is that these rules will become stricter, affecting the sourcing for battery raw materials supply chains. The 45X Advanced Manufacturing Production Credit is also expected to be prohibited for FEOC.
Political Complications
These potential changes come with complications. While Republicans and Democrats agree on the importance of strategic competition and supply chain security, not all Republicans support the elimination of tax credits and subsidies. Many IRA projects are concentrated in traditionally Republican states and create permanent jobs.
Changes to tax credits would require a change in tax law. Trump could limit EV subsidies through executive orders or other policy actions. With Trump’s administration focusing on extending tax cuts set to expire at the end of 2025, the potential IRA changes could provide the needed funds.
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