Why the Trump presidency could spell disaster for electric car manufacturers like Tesla

“Make America Great Again” is the slogan emblazoned on millions of red and white baseball caps in the US, but now that the vote is in and Donald J Trump is officially president-elect of the United States of America, the thing on most people’s minds is now: “How?”

Although many of Trump’s policies are still vague, he has since released a plan for his first 100 days in office, and near the top of his priority list will be to abolish the US’ environmental commitments.

He has previously proposed that he will dismantle the Environmental Protection Agency (EPA) and drastically lower - if not abandon altogether – environmental regulations, something which could prove catastrophic both to the environment and the world’s burgeoning electric vehicle manufacturers.

Since the start of the Obama administration in 2009, the US government has required car manufacturers to meet increasingly high fuel economy and emissions standards in order to help clean up the environment, with the aim for a national average of at least 54.5mpg by 2025.

These standards are nothing new to Americans, with emissions tests first introduced more than four decades ago and drawing the support of both Republicans and Democrats. The difference with the Obama administration was that never had there been such a heavy focus on nurturing and developing clean technology, or such lofty hoops for manufacturers to jump through.

It’s fair to say that many manufacturers will have resented the high standards of the Obama administration, but in the past eight years the market for low-emission electric and hybrid vehicles has flourished like never before.

Cars like the Toyota Prius, Tesla Model S and the new Chevrolet Bolt likely wouldn’t have become as popular, or indeed have existed at all, were it not for the government’s push for environmentally responsible transport. Except, there’s one big caveat.

As it stands, fuel prices in the US are low. Outside of any presidential elections, Americans are constantly voting, with their wallets instead of ballots. Large and powerful trucks and SUVs are what consumers are demanding, yet the government still requires manufacturers to invest heavily to reduce pollution and decrease fuel consumption.

The incongruity of this has been recognised by Trump, a well-known climate change sceptic, and one of his flagship claims throughout the election run was that he would immediately repeal America’s commitments to international climate goals.

While the world watched Trump sweep the polls, climate negotiators from countries around the world met in Morocco to flesh out the exact details of the newly-ratified Paris Agreement, brought in by the United Nations to tackle climate change.

Although Trump still hasn't given any specific details on his climate and energy policies, he has made it clear that he won’t honour any of the promises that the Obama administration made to combat global warming.

What this means for car manufacturers, and particularly electric car makers isn’t immediately clear, but it’s likely companies like Tesla and their consumers will no longer enjoy the kind of financial encouragement offered by the previous administration.

Speaking to The Wall Street Journal, one of Trumps senior policy advisors John Mashburn said: “The Trump Administration will complete a comprehensive review of all federal regulations. This includes a review of the fuel economy and emissions standards to make sure they are not harming consumers or American workers.”

For other manufacturers, it might come as good news, in the immediate term at least. It’s likely that Trump will slash emissions requirements and roll back plans like the EPA’s National Program, which was designed to reduce greenhouse gas emissions and improve fuel economy.

With less focus on reducing emissions, companies like Fiat Chrysler, which makes the majority of its profit in the US from the sales of trucks and SUVs, could focus instead on the vehicles which make them the most money.

By supplying the market with the cars it demands it could potentially lead to vast profits for manufacturers and also potentially more jobs in the short term, but the long term effects could be catastrophic.

For one thing, the incentive to continue building innovative low-emissions technologies would be all but non-existent. Of course, if this were The Apprentice Trump would likely tell you that incentive should come from the market and not the government.

Yet incentives have been crucial to the development of the low-emissions vehicle market, with federal tax credits buoying up electric vehicle adoption. The US government also runs an electric vehicle tax credit scheme like that which the UK currently offers, which gives customers a $7,500 subsidy towards the price of a new electric car.

Would as many electric cars have been sold if customers weren’t getting such substantial discounts? People like Elon Musk should rightly be concerned, particularly with cars like the Tesla Model 3 due to go on sale towards the end of next year, by which time the Trump administration could already have cut the all-important government beneficence.

General Motors, which is planning to release the new Chevrolet Bolt (re-badged as the Opel Ampera-E in Europe) around the same time will survive in any case, given that it, like Fiat Chrysler, also manufactures a great many more market-friendly cars. But Tesla, for all of its innovation, could face an uphill struggle.

The government subsidy for electric vehicles reduces the cost of the Model 3 from $35,000 to $27,500, and if it was abolished then this could have a serious impact on the car’s attractiveness to buyers.

Yet before he’s even been inaugurated, Trump has already dealt a blow to Tesla, with the company’s stock dropping four points less than a day after the announcement that he’d won the presidential election.

It’s possible that Musk and Tesla could focus more heavily on European markets after announcing earlier this week that the next production facility it builds will be located in Europe, and Musk even expressed interest in making a British Tesla factory.

However, the ongoing effects of Brexit have yet to fully materialise and there’s still considerable uncertainty, while the US currently remains Tesla’s single largest market.

There is one overlap between Trump’s vision for America and the future of zero-emissions vehicles: infrastructure. Trump has said that he will aim to create jobs by improving the country’s infrastructure network, which could potentially benefit electric cars.

Earlier this month the federal government announced that it would create a network of “alternative fuel corridors” spanning some 85,000 miles and 35 states in total to help expedite an electrified future. But given that Trump has also stated he wants to slash the national budget by $6 trillion, it’s unclear whether there’ll be room for eco-friendly technology.

As the soon-to-be-leader of the world’s single largest economy and its second-largest greenhouse gas emitter, Trump’s decisions will also have a knock-on impact on other nations that previously committed to climate and emissions regulations.

Unfortunately, his policies are a major threat for the clean energy movement and for the planet at large, and so once the dust has finally settled it could be that it’s the electric car which is the election’s biggest loser.

Find out how much you could save off the price of your next brand new car here

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