With an executive order, Trump casts doubt on the future of EVs in California
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Shel Singh has gone all-in on electric vehicles in recent years. The 36-year-old business owner currently drives an electric Porsche. Before that, it was a Tesla.
But with President Trump working aggressively to reverse policies enacted by former President Biden intended to bolster the EV market and phase out gas-powered vehicles, he’s starting to question the wisdom of his choices.
Faced with what he expects to be declining demand for EVs and fewer resources to build a network of charging stations under Trump, Singh, who lives near Sylmar in northern Los Angeles County, said he’s not optimistic about his chances for re-selling his Porsche in the future.
He is not alone. Electric vehicle owners, sellers and manufacturers are awash in uncertainty after Trump signed an executive order Monday that took aim at several EV-friendly initiatives. With the stroke of a pen, the President froze funding allocated for charging infrastructure and abandoned Biden’s ambitious goal that EVs make up half of new cars sold in the U.S. by 2030.
Trump also signaled in the order that he would eliminate a popular $7,500 tax credit available to eligible buyers of electric vehicles and revoke California’s authority to set its own regulations on gas-powered cars. Both of those moves come with legal hurdles, said Bryant Walker Smith, an associate law professor at the University of South Carolina.
“The executive order is clearly evidence of a change in tone from the last administration,” Smith said. “But there are legal constraints that in theory should limit some of the short-term implications.”
Under the Clean Air Act, California can adopt more stringent vehicle emission requirements than the federal government, but must obtain a waiver from the EPA.
Although Trump has said he wants to do away with what he calls Biden’s “EV mandate,” there is no federal rule requiring the purchase of EVs. Last December, the U.S. Environmental Protection Agency signed off on a California clean air rule that would ban the sale of new gasoline vehicles in the state by 2035. If it survives Trump’s challenges, the Advanced Clean Cars II rule would require 35% of new vehicles sold in the state to be all-electric by 2026, a goal that dealerships have said is unrealistic.
More than a dozen states have followed California’s lead in adopting clean air standards that are stricter than federal law. Trump is seeking to eliminate these standards and the EV incentive programs that come with them.
If Trump is successful in killing the tax credit, EV sales will take a hit, experts agreed. The credit goes a long way in making a new or used EV more affordable and desirable, said Karl Brauer, an executive analyst at iSeeCars.com.
“We’re going to see an undeniable drop in electric vehicle sales when the $7,500 credit goes away,” he said. “It’s not as easy to pin down how drastic that drop will be.”
When he bought his Tesla 3, Singh, who owns an online electronics company, said he was told by the salesperson that he would receive the credit, but later discovered his income was too high for him to be eligible. His frustration led to him trading out his Tesla for the Porsche.
Preparing for a drop in interest driven by the new administration, some manufacturers have already begun shifting away from sales strategies dominated by electric vehicles, including Porsche, which hinted last October that it would stray from its electric-only strategy.
Major manufacturers that produce electric and gasoline-powered vehicles have a better chance of adapting if EV sales fall significantly, Brauer said, including Volkswagen, Ford and General Motors. Companies like Rivian and Lucid, which make only EVs and sell directly to consumers, are in a more precarious position.
Days before Trump took office, Rivian finalized a $6.6-billion loan agreement with the U.S. Department of Energy to fund a manufacturing facility in Georgia. Rivian’s stock has dropped more than 9% over the past month.
EV sales have stalled, clouding California’s ambitious plans for all new cars sold in California to be zero-emission vehicles by 2035.
Dan Ives, a Wedbush Securities industry analyst, said his company predicts demand for EVs will fall between 15% and 20% over the next three to four years if the tax credit is revoked. As a result, he said, the EV market will shrink.
“There’s going to be consolidation,” Ives said. “There’s less incentives for car manufacturers to head down that road when the government is going the opposite way.”
While the elimination of the tax credit would hurt most sellers of EVs, Tesla is a likely exception, Ives said. Because of the company’s size and market dominance, Tesla could actually benefit from decreased competition from manufacturers who relied on the credit to increase sales.
Across California, dealerships vary in their reliance on EV sales. Robb Hernandez, president of Camino Real Chevrolet in Monterey Park, said roughly 50 to 60 of the 150 to 200 new cars they sell per month are electric.
“EV sales have been strong for us the last four to six months with new launches,” Hernandez said, which include the Blazer EV and Silverado EV. “Because of the incentives and lease programs and everything else out there, we’ve been able to do pretty well moving them.”
With Trump targeting those incentives, Hernandez said he’s not sure how things will play out.
“We’re in a holding pattern,” he said. “We don’t really know what kind of short- or long-term effects this is going to have on the market.”
Brian Maas, president of the California New Car Dealers Assn., said an average of 13% of sales across the 1,400 dealerships his organization represents are electric, but that number can vary significantly based on location and manufacturer.
Jessie Dosanjh, who owns 18 dealerships in the Bay Area, said electric vehicles make up around 15% of sales in aggregate. That’s a far cry from the 35% the state wants to see by 2026, he said.
Orange County resident Tina Thurm received the $7,500 tax credit when she purchased her Tesla Model S in 2020, but said she likely would have bought the car anyway. “That wasn’t instrumental in my decision to purchase,” she said of the credit. “It was the test drive that pushed me over.”
Thurm, who owns two gas-powered vehicles along with her Tesla, said Trump is protecting Americans’ right to choose what kind of car they drive.
“Nothing should be mandated,” said Thurm, who owns a jewelry business and is now semi-retired at 70 years old. “I certainly don’t want the government to tell me what I must purchase.”
Other SoCal residents are discouraged by Trump’s actions and what they signify for the EV market.
“Not getting another EV after my Tesla lease ends,” one Californian wrote on social media this week. “This country is moving backwards and isn’t ready for full EV adoption. It’s a shame because I really love my Tesla.”
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