Electric Cars in the Age of Trump

By · November 16, 2016

The launch of the electric car market in 2010 and its growth in the past six years, were made possible through robust government incentives and mandates. Few would argue that American consumers would have the same choice of about 25 EV and plug-in models—if not for the $7,500 consumer tax credit granted via the American Recovery and Reinvestment Act of 2009. Furthermore, the Environmental Protection Agency’s car efficiency rules—which in 2012 established 54.5 miles per gallon as the target for fleet averages by 2025—required the global auto industry to embrace plug-in cars. But any assumption that this support would last for the long-term was dashed last week with the election of Donald Trump.

Trump has repeatedly called climate change a hoax, promised to eliminate the EPA, and pledged support to the oil and gas industries. His appointment last week of Myron Ebell to lead the transition of the EPA indicates that Trump is serious about taking action. Ebell directs environmental policy at the Competitive Enterprise Institute, which denies the reality of man-made global warming and receives funding from the fossil-fuel industry.

These developments could spell the end of EV tax credits or, at the least, greatly reduces the chances they will be renewed when Tesla, General Motors, Nissan and Ford hit the 200,000-vehicle cap in the coming years. As a result, the net consumer price of an EV from these automakers could increase by $7,500—in a time when gas prices are low and the economics for buying an EV are not yet widely established. The upcoming so-called affordable 200-plus mile electric cars—the Chevy Bolt and Tesla Model 3—will hit the market during this uncertain period.

Two Steps Forward, One Big Step Back

It’s like rewinding the prospects for EVs back to 2012. That’s when GOP candidate Mitt Romney came out against support for EVs. His spokesperson said that any savings from President Obama’s efficiency policies “will be wiped out by having to pay thousands of dollars more upfront for unproven technology that consumers may not even want.”

Those days in 2012 were also when Donald Trump declared in a Fox News interview that clean energy was “garbage that doesn’t’ work.” Referring to government loans to electric car companies, he said, “We should not be backing a car company that comes up with a new concept for an electric car.” Yes, Fisker Automotive failed—but keep in mind that Tesla Motors might have also failed if it were not for the $465 million loan it received as part of a $25 billion advanced technology program that was, in fact, established under President George W. Bush. Tesla fully paid off that loan in May 2013.

Some could argue that California’s zero-emissions mandate—and tough standards that remain firm in Europe and Japan—will ensure that EV technology stays on track. However, once federal efficiency rules are relaxed, it will send a signal to the auto industry that it should fight against any government requirements for higher efficiency and vehicle electrification.

A Battle Ahead

Just two days after Trump’s election, automakers already started lobbying to weaken the efficiency requirements. The Alliance of Automobile Manufacturers, representing almost every major automaker, sent a letter sent to Trump’s transition team, claiming that zero-emission cars can’t be produced at a competitive price. It used its tired old argument. “Well-meaning regulatory action risks increasing compliance costs to the point that additional safety and fuel-efficiency technologies put new vehicles out of financial reach of the average new car purchaser,” wrote Mitch Bainwol, the Alliance’s chief.

The removal of incentives and standards for electric cars could be especially bad for Tesla—setting up a battle of billionaire titans: President Donald Trump versus Tesla CEO Elon Musk. (California Governor Jerry Brown will be in Musk’s camp).

Regardless of the outcome of that clash, we will soon enter a new era for plug-in cars: one in which mass-market long-range electric cars finally reach the market—but in a time when the federal government no longer believes those low- and zero-emission cars are important.

Automakers, consumers, and EV advocates will need to recalibrate. Automakers could downshift on their investment in EV research while reducing production of ultra-efficient cars to a minimal level. The race for the electric car—and the mitigation of vehicle emissions—is about to hit a speed bump.

New to EVs? Start here

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