EV Industry Persists Despite Trump Policy Shifts and Funding Challenges

The transition toward electric vehicles (EVs) seems inevitable, even amid political shifts. While the Trump administration may have taken steps to reduce support for EVs, many industry experts maintain that EVs will become a staple of the country's vehicle landscape.

Todd Cassidy, a managing director at investment firm Brown Gibbons Lang & Company, highlighted the industry's consensus: “There’s not an automaker out there that I have spoken with, or a supplier out there, who said that electrification in some form or fashion isn’t going to be part of the future.”

President Biden's Infrastructure Investment and Jobs Act and the Inflation Reduction Act allocated billions to promote EV adoption, enhance infrastructure, and support manufacturing. However, Trump countered these efforts by signing an executive order that promotes "consumer choice" over mandates and suspends federal subsidies and some state emissions waivers, like those of California.

Despite setbacks, the automotive industry’s lengthy development cycles mean that many companies will persist with their EV plans. The suspension of a $3 billion EV charging station expansion mimics similar regulatory rollbacks Trump executed during his previous term.

EV Market Developments

Jim Rampton from the University of Michigan describes the three main vehicle types: internal combustion engine (ICE), electric, and hybrid. By mid-2024, hybrids and EVs made up 19% of new sales, with EVs representing 7%, according to the U.S. Energy Information Administration. Meanwhile, they accounted for a substantial portion of luxury sales.

Alan Taub, a mechanical engineering professor, points out the historic pursuit of EVs dating back to the early 1900s. Only with the advent of lithium-ion batteries in the 1990s did EV production become viable. He noted, “These new battery chemistries really offered the ability to package the vehicle to deliver what the consumer wanted.”

Taub further praised EVs for their efficiency, fewer components, and other operational advantages. Rampton added that the complexity lies in the sophisticated software managing these vehicles, noting, “There are more lines of code right now in a car than there are across the internet.”

Environmental and Economic Considerations

The environmental advantages of EVs, particularly in reducing carbon emissions, are a primary motivation for many consumers. With transportation being the largest greenhouse gas emitter in the U.S., EVs could significantly cut emissions, as highlighted by Usha Haley from Wichita State University.

Nevertheless, the environmental costs of lithium mining and the disposal of EV batteries remain concerns. Yet, as technology evolves, Haley sees tangible benefits for the environment.

Economically, EVs still carry a premium over ICE vehicles, though potential tax credits, like those in Biden’s Inflation Reduction Act, may alleviate costs up to $7,500. Even as federal policies shift, states like California may continue to forge their own paths with independent incentives.

Industry Dynamics and Federal Policies

The auto industry's future may witness reduced federal involvement, but experts like Taub believe that the government still has a role, especially in maintaining global competitiveness and CO2 reduction efforts. He remarked that governmental support in research and development remains vital.

Rampton expects automakers to lead infrastructure developments, possibly through alliances similar to the Ford-Tesla charging partnership in 2023. He concludes, “I think EVs are definitely here to stay, and I think they definitely have a very, very strong future.”