The possible second term for former President Doland Trump is widely expected to be good for business and the car manufacturing sector is, in particular, set to greatly benefit from such an outcome of the November elections.
The collateral damage of Trump’s approach to bolstering U.S. manufacturing is, however, likely to come in the form of the electric vehicle (EV) industry.
During his speech at the Republican National Convention (RNC), the candidate promised to end many of the green policies otherwise expected to boost EV sales, such as the new air pollution limits set by the Environmental Protection Agency in March.
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The EV industry is, as of 2024, still relatively nascent and heavily depends on government incentives and rules aimed at mitigating the climate crisis for sales, as not all potential buyers are keen on giving up the more traditional combustion engines.
The effects of reduced incentives can be seen in the drop of electric vehicle sales in Norway – long held to be something of a gold standard in terms of EV adoption – which saw a substantial drop in 2023 after the pulling back of some of the generous benefits.
Is Musk working against himself by supporting Trump?
Given the likely adverse effects of a second Trump presidency on the EV industry, an apparent paradox arose following the July 13 assassination attempt on the Republican nominee.
Indeed, Elon Musk, the CEO of the most recognizable – and one of the biggest – electric vehicle makers, Tesla Motors (NASDAQ: TSLA), pledged to support the Trump campaign with $45 million per month.
Along with Musk’s political leanings – which have shifted further to the right by 2024 as evidenced by the billionaire’s X posts – there may also be some business sense in the decision.
Indeed, as pointed out by Wedbush’s Dan Ives earlier in July, while the broader EV industry is likely to suffer under a second Trump presidency, the administration may be positive for Tesla due to the company’s brand recognition and size – both factors that give it better chances to absorb any possible damage and even possibly gain market share.
Additionally, given Musk’s views on workplace unionization, supporting Trump could have made sense prior to Biden dropping out of the race given the incumbent’s comparatively union-friendly stance.
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