Shares of electric vehicle (EV) manufacturers, including Tesla, Rivian, and Lucid, experienced a significant drop following President Donald Trump’s move to dismantle key Biden-era EV policies. This shift in administration strategy has sparked concerns about the future of EV adoption in the U.S. and has sent ripples through the stock market. Trump’s actions mark a clear departure from the previous administration’s push for electrification, signaling a potential slowdown in the transition to cleaner transportation.
Trump’s “Unleashing American Energy” Executive Order
On his first day back in office, President Trump signed an executive order titled “Unleashing American Energy,” which directly targets the policies promoting electric vehicle adoption. This order is designed to reverse the course set by the Biden administration, which had implemented various measures to encourage the growth of the EV market. Trump’s executive order specifically aims to:
- Eliminate the “EV Mandate”: Trump has repeatedly vowed to end what he calls the “electric vehicle mandate,” which he argues restricts consumer choice and distorts the market. Although there is no official federal mandate requiring all vehicles to be electric, the Biden administration set a non-binding target for EVs to make up half of all new vehicle sales by 2030. This target has now been revoked.
- Pause Funding for EV Infrastructure: The order directs agencies to halt the disbursement of funds allocated for EV charging stations. This includes billions of dollars from the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, which were intended to expand the national charging network.
- Reconsider Emissions Standards: Trump’s administration plans to reconsider the stringent emissions standards previously imposed on automakers. This could lead to a relaxation of rules requiring manufacturers to sell a specific percentage of EVs by 2032.
- Challenge State Waivers: The executive order seeks to revoke the waiver that allows California to enforce its zero-emission vehicle mandate by 2035. This could slow the pace of EV adoption in California and the 11 other states that have adopted similar rules.
- Eliminate EV Tax Credits: The Trump administration intends to eliminate the $7,500 federal tax credit for plug-in car purchasers, a significant incentive aimed at making EVs more affordable for consumers.
These actions reflect a broader shift from a regulatory-driven approach to a more free-market stance on vehicle electrification. Trump’s strategy prioritizes traditional energy sources and aims to reduce government intervention in the automotive sector.
Impact on EV Stocks
The immediate effect of Trump’s executive order was a noticeable decline in the stock prices of EV manufacturers. Investors reacted to the potential slowdown in EV adoption and the removal of key incentives that had previously supported the industry.
Tesla: Despite CEO Elon Musk’s support for Trump, Tesla’s stock also experienced a dip, although it was not as severe as other EV companies. This suggests a mixed investor sentiment towards Tesla, as some may see potential benefits for the company in a less regulated environment, while others are concerned about the impact of reduced consumer incentives. Some analysts have pointed out that Germany and France’s moves to end their EV tax credits contributed to Tesla’s sales volume falling. Tesla lost $15 billion in brand value in 2024, partially due to Musk’s political rhetoric and behavior.
Rivian and Lucid: Rivian and Lucid, both relatively new players in the EV market, saw a more significant drop in their share prices. These companies are more vulnerable to policy changes, as they have less established sales and infrastructure compared to Tesla. The removal of tax credits and reduced government support for EV infrastructure could particularly hurt their growth prospects.
The table below shows how EV stocks were impacted on the day Trump signed the executive order:
| Company | Stock Change |
| —————- | ———— |
| Tesla | Down |
| Rivian | Down |
| Lucid | Down |
| ChargePoint | Down 10.4% |
| Niu Technologies | Down 6.6% |
| Blink Charging | Down 8.1% |
| EVgo | Down 7.5% |
| Polestar | Down 5.8% |
Conversely, stocks of companies that supply internal combustion engine (ICE) vehicle parts experienced gains, indicating a shift in investor confidence towards traditional automotive technologies.
The “Carrot” vs. “Stick” Approach
The contrasting policies of the Biden and Trump administrations highlight a debate about the best approach to EV adoption. The Biden administration focused on a “stick” approach through strict regulations and mandates, pushing automakers to invest in EV technology and production. This included:
- Emissions Standards: Automakers were required to ensure that a significant percentage of their new vehicle sales were EVs by 2032, with targets ranging from 30-56%.
- Sales Targets: The administration aimed for EVs to comprise 50% of all new vehicle sales by 2030.
In contrast, the Biden administration also implemented a “carrot” approach through incentives, aimed to encourage consumers and manufacturers to participate in the EV transition:
- Tax Benefits: Federal tax credits were provided to make EVs more affordable for consumers.
- Infrastructure Investment: Billions of dollars were allocated for expanding the EV charging network.
- Manufacturing Support: Incentives were offered to companies to build EV factories and battery plants in the U.S.
Trump’s policies represent a move away from both the “carrot” and “stick” approaches, favoring a market-driven approach with minimal government intervention.
Industry Reaction and Concerns
While some automakers may welcome reduced regulatory pressure, the long-term effects of Trump’s policies on innovation and global competitiveness remain uncertain. U.S. auto giants Ford and GM, which have invested billions in EV development, might need to rethink their EV strategies in light of these changes.
Manufacturers, including Toyota, Stellantis, and Ford, had previously pushed for current regulations to be maintained, expressing concerns that changes under Trump would harm the industry. These companies have already made significant investments in the transition to EVs, and the policy reversals could disrupt their plans.
There are also concerns about how the policy changes will impact consumer choice and accessibility. Without tax credits and a robust charging network, EVs could become less attractive to many buyers, potentially slowing down the transition to cleaner transportation.
Potential Roadblocks and Future Challenges
The Trump administration’s EV policy agenda may face some significant challenges. Proposals will likely meet opposition from congressional Democrats and Democratic-led states like California. Legal challenges are also expected, especially concerning the rollback of California’s emissions standards waiver.
With market and economic challenges mounting against President Trump’s proposals, US consumers will not be the only ones pushing back. Between the industry’s likely inability to benchmark progress against foreign companies with reduced emissions tracking, and the existing EV market’s sunk cost, the industry is likely to advance a more cautious pace on the changes proposed.
The future of the EV market in the U.S. is now uncertain. The Trump administration’s policies could slow down the pace of EV adoption, potentially impacting the country’s ability to meet climate goals and compete in the global EV market.
