Donald Trump pulls the plug on battery manufacturers’ EV dream

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On his first day back in office, the new US president wasted no time making good on a promise he made last year: to dismantle what he has described as a mandate to sell electric cars.

Donald Trump, who had said such measures were needed to save the US auto industry from “total annihilation”, has ordered his administration to eliminate mandates for electric cars and roll back rules governing car pollution and fuel economy standards. The directive also calls on regulators to consider removing unfair subsidies that favor electric cars over other technologies. Repercussions could extend far beyond the United States to global automakers and battery makers.

US EV policies have played a crucial role in the industry’s growth, setting the stage for a rosy outlook. The number of electric cars on American roads was expected to reach 27 million. in 2030 and 92 million in 2040, according to PwC’s analysis. This expansion would also have meant a significant boost to electric battery suppliers, who could benefit from the sector’s rapid acceleration.

Global automakers have leaned heavily on these mandates and incentives, including the popular $7,500 federal tax credit, to narrow the price gap between electric and gasoline vehicles. Research from the Massachusetts Institute of Technology estimated that direct purchase rebates lead to an 8 percent increase in new electric battery registrations per year. $1,000 incentive offered.

Completely repealing the popular $7,500 consumer rebate would not be a simple task, as it would require an act of Congress to do so. But Trump would easily be able to adjust the guidelines for eligibility for the incentives, such as making changes to domestic manufacturing and component sourcing and procurement requirements — effectively reducing the number of vehicles eligible for the incentives.

Shares in battery makers in Asia, including Panasonic, SK Innovation and LG Energy Solution, fell on Monday, with the latter down 4 percent. Valuations are still significantly higher compared to the previous year, when LG Energy traded at just under 100 times forward earnings, about double the level of a year ago, as investors cling to hopes that the impact of policy changes will be slow to materialize.

It is true that any regulatory review will take months to complete as legal challenges are likely. But the speed with which Trump has outlined his policy direction for electric cars is enough to have a chilling effect on the market. In a market that still relies on stable incentives to maintain the current rate of adoption, political disruptions risk slowing the electric transition.

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