The recent Wood Mackenzie report, “Trump’s executive orders unsettle electric vehicle and battery markets” indicate that the executive orders by the new administration could have profoundly slow the market for electric vehicles in the U.S.
The report notes that the changes laid out in the Unleashing American Energy executive order will have wide-ranging impact on subsidies for people buying EVs to funding for EV charging stations, as well as trade tariffs on imported raw materials.
“The ‘Unleashing American Energy’ order could have significant impact on the EV market, especially if the administration removes the $7,500 consumer 30D and commercial 45W EV tax credits,” said Max Reid, principal analyst at Wood Mackenzie. “This is yet to be determined, but Wood Mackenzie does expect any remaining EV credits to contain stricter eligibility criteria around critical mineral sourcing to promote mineral security.”
From Unleashing American Energy order:
…It is the policy of the United States… to eliminate the “electric vehicle (EV) mandate” and promote true consumer choice, which is essential for economic growth and innovation, by removing regulatory barriers to motor vehicle access; by ensuring a level regulatory playing field for consumer choice in vehicles; by terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable…
This would eliminate zero emission vehicle mandates in states including California, Washington and Oregon. The effect in California would be significant due to the size of the California market. Wood Mackenzie estimates it would impact 30% of the U.S. light vehicle market.
“Enforcing a stricter new policy could lower plug-in EV adoption from 32% to 23% by 2030,” said Reid. “While the extent of subsidy cuts and details on new emissions norms are unclear, we expect the trajectory of EV sales to be slower than previous forecasts.”
A new policy may also affect the U.S. Postal Service’s plan to acquire at least 66,000 battery electric delivery vehicles by 2028 as a part of its strategy to replace its aging fleet. The Postal Service says its priority is to provide its carriers and communities with safer, more efficient vehicles as soon as possible. The greening of the fleet is part of the U.S. Postal Service’s overall network modernization efforts.
A year ago the Biden administration announced $623 million in grants to build at least 500,000 publicly available chargers by 2030.
“America led the arrival of the automotive era, and now we have a chance to lead the world in the EV revolution—securing jobs, savings, and benefits for Americans in the process,” said U.S. Transportation Secretary Pete Buttigieg.
Private companies had announced more than $155 billion in the EV and battery supply chain, and the Bipartisan Infrastructure Law had allocated $2.5 billion in spending for a Charging and Fueling Infrastructure (CFI) Discretionary Grant Program. The CFI competitive funding program complemented the $5 billion National Electric Vehicle Infrastructure (NEVI) formula program to build the “backbone” of high-speed EV chargers along the nation’s highways.
Trump’s recent executive order specifically demands a 90-day pause to review both CFI and NEVI.
The Wood Mackenzie report notes that to date $3.2 billion has been apportioned to states, but only $600 million has been awarded in contracts for over 4,500 charging ports. Contracts already awarded to suppliers are unlikely to be affected, Wood Mac said; however, $600 million is only 19% of the total funding. Award announcements increased in Q4 2024, as many states were concerned about the future of NEVI funding.
The report points out that NEVI-funded ports accounted for only 126 of the 14,000 new ports in 2024 or just 0.1%.
“Naturally, we expect more NEVI stations to open in 2025, but the NEVI funding was a part of the broader picture,” said Reid. “The pace of charging infrastructure deployment should remain unchanged in early 2025, but lower EV sales may temporarily cause a dent in deployment towards the end of the year. So, growth in charging station deployment in 2025 may not be the same 30% as we observed in 2024, but overall, we believe growth is inevitable.”
Batteries and raw materials
Other markets in question are batteries and raw materials, both of which hinge on strong EV adoption. The report indicates that with the expected tightening of the 30D tax credit, which will reduce EV purchases, demand for EV batteries will also be reduced. “The base case forecast shows that the annual U.S. EV and energy storage system (ESS) battery demand will increase to over 500 GWh by 2030, but a bearish scenario suggests this could be closer to 400 GWh,” the report says, adding that, “The key role batteries will play in US energy security is an upside risk to demand under the new administration.”
Raw materials used in the manufacture of EV (and other) batteries currently come primarily from China. With potential 60% imports on goods from China, prices battery cells will increase by 29% and cathode by around $10,000/t, according to Wood Mackenzie. The result will be higher EV prices on top of a potentially reduced subsidy, which will reduce sales. A potential upside would be that domestic or “ally nation” supply would become more attractive. However, the Trump administration has also promised to add tariffs to Canadian and Mexican imports by February 1, the report says.
“The U.S. imports around 50% of its refined nickel from Canada,” said Reid. “In theory, the US could replace Canadian imports, but the reality is that the form of the metal is difficult to source elsewhere. Moreover, nickel is used extensively in the aerospace sector – an industry where switching suppliers is a lengthy process. We expect imports to continue despite tariffs, increasing costs further down the supply chain.”
Uncertainty
As with any change in administration there is some level of uncertainty around the implementation of new policy. The Trump administration’s swift action on policy changes has been met with equally swift action by a coalition of 17 state attorneys general who recently sent a letter urging Congress to retain investments made under the Inflation Reduction Act (IRA). Since the passage of IRA in 2022, businesses have invested nearly $500 billion in low-carbon energy and domestic manufacturing, with private investment exceeding public spending five- to six-fold. The coalition urged Congress to retain important incentives in the tax code, including 30D, 45X, 45Y, 48C and 48E, as well as the grant and loan programs associated with them.
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