During the inaugural address, President Trump claimed there was a federal mandate that would prohibit Americans from buying gasoline-powered cars. The truth is “there never has been a federal rule requiring the purchase of EVs.”
Signed on January 20, 2025: UNLEASHING AMERICAN ENERGY (read the full text here).
While the new order appears to provide consumers with more choices, it will likely face long legal battles and may also require congressional legislation to roll back some of what the president would like eliminated. But even if the President succeeds in this mission, electric vehicles will continue to be manufactured and sold in the United States.
The face of automobile manufacturing has changed. Ford Model T may have been the first engine made, but it will not be the last and automobile and truck manufacturing is now a global business. Americans stand tall for technological advances; however, the United States is no longer the largest auto producing country in the world. China’s clear focus on the manufacture of electric vehicles has taken it to the point of global domination. China built 50 million vehicles in 2024 and nearly one-third of those were EVs or plug-in hybrids.
Yes, many American automobile manufacturers and some foreign manufacturers as well, did announce late last year that new manufacturing and sales would shift slightly from the heavily promoted electric and electric hybrid strategies. Volkswagen, Ford, and General Motors have a better chance of adapting as they currently produce both electric and gasoline-powered engines. However, in the days before Trump took office, Rivian finalized a $6.6 billion manufacturing facility to fund a new facility in Atlanta Georgia. Undoubtedly, there will be a drop in EV sales in the next 3-4 years, but legacy manufacturers will not walk away from EVs. Even if the short-term forecast will be some losses, long-term projections predict a swing to profits similar to Tesla when it began to ramp up production. Electric vehicles have fewer moving parts and can be more profitable to build than the complex engines and transmissions of a gasoline-powered car. Market reports showed Tesla’s profit margins on cars at nearly 16% during the first quarters of 2024, nearly double that of General Motors.
For everyday drivers like us what does all of this mean?
Probably the biggest hit will be the elimination of the $7,500 tax credit available to eligible buyers of electric vehicles. This tax benefit is a big incentive in making a new or used EV more affordable and desirable in the marketplace. Strangely enough, Elon Musk has lobbied for the removal of the tax credit. Due to Tesla’s company size and market dominance, this company may receive a benefit from a decrease in competition as other manufacturers decide to move away from electric vehicles. Some industry analysts believe the demand for electric vehicles will fall between 15% and 20% over the next 3 to 4 years if the tax credit is revoked.
The historic 2022 Transportation bill also provided federal support for vehicle-charging stations and low interest loans for traditional automakers building new plants to build EVs and the batteries they need. This freeze on electric vehicle infrastructure will undoubtedly delay in implementation of the nation-wide electric vehicle infrastructure planned by our former President, but automakers are playing the long-term game. The American appetite for electric vehicles will continue to grow and auto manufacturers are betting the demand for electric vehicles will be stronger than the demand for gasoline-powered cars.
Within the design houses of Michigan, dozens of models of EVs are being formed and are in some stage of production, a process which can be much longer than a single presidential term.
For those of you who own EVs or EV hybrids the resale market may look bleak for the next few years, but the markets will change. And for those of you who are interested in purchasing an EV or EV hybrid, the next few years could be an excellent time to visit your local dealership. The prices may be falling.
