A recent Trump speech spooked electric car investors. But such a reaction is unwarranted.
If you’re a regular reader of these pages, you know I’ve been an EV bull since before Tesla even went public. In fact, back in 2007, I spoke at an energy conference where I told a crowd of largely oil & gas investors that within ten years, they would start seeing highway capable electric cars on the highways. I was right. Despite getting a lot of weird looks when I made that statement.
Overall, the EV industry has enjoyed rapid growth over the past decade or so. And that growth will continue. The question, of course, is will Trump seek to put the kibosh on the EV market?
If you listen to him, you’d think the answer would be a resounding “yes.” He’s been very clear that he wants to end the federal EV tax credit while offering the oil & gas industry a proverbial reach-around. But this has nothing to do with how he really feels about electric cars.
That Trump Speech Spooked Electric Car Investors. Unnecessarily
Truth is, Trump could really care less about electric cars. But you know who does care about electric cars? A majority of republican voters who are convinced that, as part of the general GOP platform, EVs should be criticized.
I suppose this is mostly due to the fact that EVs tend to be less environmentally damaging than internal combustion vehicles. And unless you’ve been living under a rock, you know that anything that even smells like environmentalism is a “hard no” for the GOP.
Understand that I don’t say this to bash republicans or Trump. This is just an observation of truth. And because so many republicans believe that EVs are at odds with the republican platform, democrats love them. So much that they’re willing to artificially support the market with unjustifiable subsidies. And boy has that been a shit show, too.
As a part of Biden’s infrastructure law, the government set aside $7.5 billion for EV charging infrastructure. To date, the government has installed less than a dozen charging stations.
And while the $7,500 EV tax credits have certainly helped get drivers into electric cars, those things are so close to price parity now, it’s unlikely any tax credits would even be necessary to level the playing field in another year or two.
So if Trump does get his way and is able to pull those tax credits in an effort to placate a very large group of people who hate EVs because they’ve been told to by their partisan slave owners, it’ll likely only affect EV sales for a year or two at most.
I should also point out that, despite warnings of the EV market collapsing, the market is actually doing quite well.
According to Forbes, a recent sales surge indicates that the death of the electric car has been greatly exaggerated.
Kelley Blue Book reports that 330,463 EVs were sold in the U.S. during the second quarter of the year. Which is an 11.3% boost over the same period in 2023, and is 23% better than during the first quarter. They comprised 8% of all new-vehicle sales in the quarter, which surpasses the previous record of 7.2% set a year earlier.
The interesting thing to point out here is that lower pricing has absolutely helped bolster EV sales.
Last month, Tom Randall from Bloomberg wrote about this very thing, noting that long-range EVs now cost less than the average new car in the U.S.
A stricter definition of price parity is the point at which the average EV costs the same as the average internal combustion engine. Excluding gas savings and government subsidies. That upfront affordability is key for the later stages of widespread adoption.
American car buyers demand more range from electric vehicles than drivers in any other country. The average EV now comes with about 300 miles, and with a few of those models selling for less than the average car, others will surely follow. The IEA says price parity will be the norm by 2030.
Yes, that Trump speech spooked electric car investors. But the transition from internal combustion to vehicle electrification is well underway. And no amount of EV hatred from the GOP will stop that. In fact, I would argue that with less federal support, we’ll see even more affordable EVs hit the showrooms in a much faster time frame. I suspect that the car makers most likely to achieve this include, but are not limited to …
- Tesla (NASDAQ: TSLA)
- GM (NYSE: GM)
- Hyundai (OTCBB: HYMTF)
- Volkswagen (OTCBB: VWAGY)
- Ford (NYSE: F)
Of course, if China is somehow able to sell its insanely inexpensive EVs in the U.S. – without those farkakte tariffs – it becomes a completely different ballgame. But for now, that’s just not in the cards.
