Upon returning to office Monday, President Donald Trump wasted no time moving against one of his most frequent targets on the campaign trail: electric vehicles and the Biden administration policies that contributed to their rise.
On the first day, he had already signed many executive orders to reverse course from his predecessor. The future will show if this complete policy reverse will be so easy to imply as the new president suggests.
One of Trump’s many executive orders, “Unleashing American Energy,” commits to eliminating what the president unjustifiably calls an “electric vehicle (EV) mandate” to “promote true consumer choice, which is essential for economic growth and innovation, by removing regulatory barriers to motor vehicle access.”
‘Unfair subsidies’
The order also says Trump’s administration will consider ending what he calls “unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies.”
Trump also ordered federal agencies to “immediately pause the disbursement of funds… including but not limited to funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program,” directly targeting funding for DC and AC public fast-charging.
That move could leave the fast-growing charging industry, including Tesla, one of the program’s biggest beneficiaries to date, in the lurch. Much of that funding had already been allocated to states, thanks partly to fast-tracked moves in the Biden administration’s final days in office.
Meanwhile, Trump could face opposition from elected officials within his own party representing states that are seeing significant investments in building EVs in the U.S. For example, Hyundai’s new Metaplant in Georgia is the most important economic development project in that state’s history.
Other beneficiaries of new EV or hybrid-related investments include North and South Carolina, Tennessee, Kentucky, and others. This could be why the administration says it will merely “consider” ending certain pro-EV subsidies.
Legal challenges
As the Wall Street Journal noted, many of Trump’s executive orders will likely face legal challenges in the coming weeks and months. Today’s orders do not offer any specific policy actions around emissions rules, EV tax credits, or manufacturing incentives.
Perhaps more crucially for the auto industry, today’s executive orders avoided mention of tariffs that would almost certainly elevate the prices of new cars. Trump said on Monday his threatened tariffs on foreign goods (including cars) from Mexico, Canada, and China will now be imposed on Feb. 1 instead of ‘Day One’, already walking away from a key promise he made on the campaign trail.
Ford’s first reaction
Of course, Trump’s arrival on the scene was also the talk of the town at the Detroit Motor Show, which ended yesterday. Ford CEO Jim Farley was one of the first to react. The company’s message to the president-elect is simple: “Ford is the No. 1 automaker. We produce more vehicles in the United States than anyone. We export more vehicles than anyone. We have more UAW workers than anyone.”
“We are America’s car company. Let’s work together to make our industry stronger. We have a lot of policy decisions to make, from tariffs to CO2 policy, and we can work together to make our industry stronger and make companies like Ford that have bet on America stronger,” Farley added.
He is particularly concerned about protecting the IRA’s production credits (Inflation Reduction Act), which subsidize EV battery manufacturing in the United States. “The production credit is critical for our industry, and it will significantly impact our industry if it goes away,” he said.
“Many of our plants in the Midwest that have converted to EVs depend on the production credit. We would have built those factories elsewhere, but we didn’t.”
Ford has three joint-venture battery plants with SK On Ltd. in Kentucky and Tennessee, with the first in Glendale, Kentucky, set to launch production this year. It also is expected to open next year a roughly $2 billion battery plant in south-central Michigan’s Marshall to build lower-cost lithium-iron-phosphate batteries with technology licensed from Contemporary Amperex Technology Co. Ltd. (CATL), the Chinese battery giant that was blacklisted this week by the U.S. Defense Department.
That decision means the department cannot purchase from CATL, but the ruling doesn’t affect private companies. However, it could raise the question of whether, if using CATL products is deemed too risky for the Pentagon, companies like Ford or Tesla should be cautious in using its technology, and consumers should be wary. Additionally, the decision could make it more likely that CATL will face sanctions.
Nevertheless, Farley confirmed to The Detroit News that Ford is moving forward with its Marshall plans and the agreement it signed with CATL: “We’re already building the plant. It’s almost done.”
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