If President Trump has his way, the auto industry’s transition to electric vehicles will soon be back. It would eliminate tax credits for electric vehicle purchases, federal grants for chargers and subsidies and loans to help renovate assembly lines and build battery factories.
The executive orders issued by Mr. Trump on Inauguration Day constitute a sweeping repudiation of a central element of former President Joseph R. Biden Jr.’s multibillion-dollar program. to address climate change, which Republicans cast as a campaign to ban gas cars.
The orders also pose a challenge to automakers that have invested billions of dollars in electric vehicles, in part because the Biden administration encouraged them. But some of the orders appear to bypass Congress or federal rulemaking procedures, which could make them vulnerable to lawsuits and even resistance from within the Republican Party.
While designed as a way to revive the U.S. auto industry, the orders could cause U.S. automakers to fall behind if they scale back their electric vehicle programs while Asian and European automakers continue to refine the technology, analysts say. . Already, 50 percent of car sales in China are electric or plug-in hybrids, and Chinese automakers such as BYD are selling more cars worldwide, driving away customers from established car companies, including U.S. manufacturers.
An executive order titled “Freeing American Energy” and signed by the president on Monday directs federal agencies to immediately stop disbursing funds appropriated by Congress that were part of Biden’s effort to push the auto industry toward zero-emission vehicles. gases. Among other things, the funds helped states install fast chargers along major highways.
Mr. Biden’s flagship climate law, the Inflation Reduction Act, also provided tax credits of up to $7,500 for buyers of new electric vehicles and $4,000 for buyers of used models. The credits effectively brought the cost of buying some electric cars roughly on par with prices for cars with gasoline or diesel engines.
Mr. Trump also rescinded an aspirational executive order by Biden that required 50 percent of new vehicles sold in 2030 to be fully electric, plug-in hybrids or vehicles that run on hydrogen fuel cells.
And Mr. Trump said the administration would seek to revoke California’s authority to set air quality standards that are stricter than federal rules. This would have a far-reaching effect. California aims to have 100 percent of new car sales be electric by 2035, and some of its standards have been copied by at least 17 other states.
“The impact of this is going to be significant,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity firm that invests in sustainable transportation.
If demand for electric vehicles increases, as has happened in other countries such as Germany that cut incentives, she noted, carmakers could be left with costly, unused electric vehicle and battery factories.
“Federal financing for EV and battery manufacturing will be more difficult to access, increasing the risk of stranded capital for manufacturing projects already underway,” Ms. Natarajan said in an email.
Representatives of the fossil fuel industry celebrated the president’s action, while environmentalists complained about what they said was a serious setback to efforts to cut greenhouse gas emissions and reduce urban air pollution caused by cars.
“This is a new day for American energy,” said Mike Sommers, president of the American Petroleum Institute, in a statement, “and we applaud President Trump for moving swiftly to chart a new path where oil and natural gas USA hug. not limited.”
Katherine García, a transportation expert at the Sierra Club, said: “Increasing vehicle emission safeguards harms our health, our wallets and our climate. We will fight it at every turn of the road.”
But the ultimate effect may not be as far-reaching as the strong language in Mr. Trump’s executive orders suggests.
Funds to encourage the sale and production of electric vehicles were included in legislation that the president cannot unilaterally repeal. Mr. Trump also cannot revoke the rules that the Treasury Department and other government agencies put in place to determine how the money will be distributed with the stroke of a pen. Any attempt to shorten the arduous process of proposing new regulations that includes soliciting public comment will almost certainly trigger credible legal challenges.
The Energy Department has agreed to lend billions to automakers like Rivian, which will get $6 billion for a plant near Atlanta to make electric sport utility vehicles. The loan agreements, some finalized in the final days of the Biden administration, are binding contracts.
Most of the money has flowed into congressional districts in states like Georgia, Ohio, South Carolina and Tennessee, where Republicans dominate local politics. Their representatives may be reluctant to repeal laws that have brought jobs and investment to their countries. That’s a challenge for Republican leaders vying for slim majorities in the House and Senate.
Ultimately, individuals and families will decide what cars they buy. Electric vehicles and plug-in hybrids are gaining market share not only because of subsidies, but also because they offer quick acceleration and lower fuel costs. Cars running on fossil fuels have lost weight, although this could change if financial incentives are removed from battery cars and trucks.
The sudden shift in political direction presents a problem for automakers. Some may welcome the president’s promises to roll back emissions and air quality standards that force manufacturers to sell more electric cars than they might like. But eliminating federal subsidies could disrupt their financial planning when most are struggling to make ends meet or increase profits.
The about-face over electric vehicle policy adds to a climate of uncertainty and risk heightened by the president’s promise to impose 25 percent tariffs on goods from Canada and Mexico, which are major suppliers of cars and auto parts to the United States.
The U.S. auto industry “will be devastated by tariffs on assembled vehicles or parts at this level,” Carl Weinberg, chief economist at High Frequency Economics, said in a note to clients on Tuesday.
Some automakers seemed to applaud the president’s actions, while others were noncommittal.
“President Trump’s clear focus on policies that support a strong and competitive manufacturing base in the United States is extremely positive,” Stellantis, which owns Dodge, Jeep, Ram, Chrysler and other brands, said in a statement.
Mary T. Barra, the chief executive of General Motors, congratulated Mr. Trump on Monday at the X and said the company “looks forward to working together on our shared goal of a strong U.S. auto industry.”
There is no sign that Elon Musk — Tesla’s chief executive and head of what Mr. Trump is calling the Department of Government Efficiency — is using his influence to soften the blow on electric vehicles. Tesla accounts for just under half of all electric cars sold in the United States, and nearly all of its vehicles qualify for a $7,500 tax credit.
Four of the 16 cars and trucks that can be purchased with the help of that tax break are made by Tesla. GM is the only automaker with more eligible models, at five. No other company has more than two qualifying vehicles.
Mr. Musk has previously said that the government should get rid of all subsidies and that Tesla will suffer less than other automakers. But analysts note that Tesla’s sales and profits would be hit hard if Mr. Trump were to successfully repeal or cut the electric vehicle tax credit, California’s clean air waiver and other such policies.
Tesla did not respond to a request for comment.
During an appearance before Trump supporters in Washington on Monday, Mr Musk, who is also the chief executive of SpaceX, was delighted that the president had promised to send astronauts to Mars. “Can you imagine how awesome it will be for astronauts to plant the flag on another planet for the first time?” Mr. Musk said. He did not mention cars.