Trump’s Policy Overhaul Leaves EV & Battery Sectors in TurmoilTrump’s Policy Overhaul Leaves EV & Battery Sectors in Turmoil
The president's executive orders mark a significant shift in US EV policy, potentially slowing the adoption of electric vehicles and challenging battery manufacturers’ growth prospects.

Donald Trump’s return to the presidency has brought sweeping changes to the electric vehicle (EV) and battery sectors. Among the most consequential moves, Trump revoked a 2021 executive order targeting 50% EV sales by 2030, a change certain to disrupt automakers’ strategies. The 2021 order had been instrumental in shaping automakers’ strategies and fostering EV adoption in the U.S. While the target was nonbinding, it was supported by major automakers, who now face significant uncertainties.
Trump’s administration has also frozen $5 billion allocated for EV charging stations, a move that will potentially slow the expansion of critical infrastructure needed to support widespread EV adoption. The administration also aims to eliminate state emissions waivers, such as California’s, which set stricter rules for phasing out gasoline-powered vehicles by 2035. If successful, this could stall progress in the transition to EVs in multiple states, affecting automakers who have invested heavily in EV development in response to these regulations. Instead, Trump’s policies favor reallocating funds to bolster domestic battery manufacturing for “national defense supply chains.”

Tesla charging station. Credit: Tesla
The Environmental Protection Agency (EPA) has been directed to reevaluate rules requiring automakers to increase EV production to meet stricter emissions controls by 2032. The administration’s swift policy reversal has already led to market volatility and raised concerns about the future of U.S. EV and battery initiatives.
Financial markets react to policy uncertainty
The financial impact of these changes has been immediate. Shares in Asian automakers and battery makers dropped following Trump’s announcements, highlighting the global ripple effects of U.S. policy shifts. South Korean battery manufacturers, such as LG Energy Solution and SK Innovation, experienced declines of 4.3% and 3.7%, respectively, as reported by Reuters. Japanese automakers also faced challenges, with Mazda Motor and Honda Motor shares falling 2% and 0.3%.
Despite these setbacks, Chinese EV manufacturers’ shares rose after Trump refrained from targeting Beijing in his inauguration speech, reflecting the intricate dynamics of global EV competition. Takahide Kiuchi, chief economist at Nomura Research Institute, told Reuters that additional tariffs and policy changes could worsen export conditions for Asian countries reliant on U.S. markets.
Impact on EV incentives and US manufacturers
Trump’s rollback of EV mandates includes a push to reconsider the popular $7,500 federal tax credit for EV purchases. Narrowing eligibility criteria for this tax credit could potentially reduce the number of qualifying vehicles, influencing consumer behavior by raising the effective cost of EVs. Automakers may need to adjust their strategies to account for this shift. While fully repealing the tax credit would require Congressional action, Trump’s administration may narrow eligibility criteria, reducing the number of vehicles that qualify for incentives. This could disproportionately impact companies like Tesla, General Motors, and Ford, which have invested heavily in U.S.-based battery factories to benefit from previous subsidies.

The first production Cadillac Lyriq EV rolls off the assembly line in Spring Hill, TN. Credit: General Motors Co.
Automakers with Mexican manufacturing operations are also under pressure. Trump has indicated potential 25% tariffs on vehicles imported from Canada and Mexico, starting as early as February. These tariffs would significantly affect companies like Honda and Mazda, which rely on Mexican plants to supply the U.S. market. Nissan, which exports approximately 300,000 vehicles annually from Mexico to the U.S., also faces heightened risks.
Broader industry repercussions
The EV industry’s growth has been closely tied to stable incentives and policies. According to PwC, U.S. EV adoption was on track to reach 27 million vehicles by 2030, driven by government support. Trump’s abrupt policy reversals could stall this momentum, affecting both domestic and global manufacturers. The Financial Times noted that regulatory overhauls, while not immediate, could have a chilling effect on the market as automakers and investors adapt to new uncertainties.
Trump’s decision to resume issuing export permits for liquefied natural gas (LNG) projects and his emphasis on energy independence signal a broader shift away from clean energy initiatives.
Challenges ahead for automakers and battery makers
As the U.S. EV market adjusts to these sweeping changes, automakers and battery manufacturers must navigate an increasingly complex landscape. Legal challenges to Trump’s policies are likely, but the administration’s swift actions have already created significant market disruptions. For now, the industry faces an uncertain future, with stakeholders bracing for the long-term implications of these policy shifts.
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