



If President Donald Trump has his way, the auto industry’s transition to electric vehicles will soon slam into reverse. He will erase tax credits for electric vehicle purchases, federal grants for chargers, and subsidies and loans to help retool assembly lines and build battery factories.
Executive orders issued by Trump on Inauguration Day amount to a sweeping repudiation of a centerpiece of former President Joe Biden’s multibillion-dollar program to address climate change, which Republicans cast as a campaign to ban gasoline cars.
The orders also present a challenge to automakers that have invested billions of dollars in electric vehicles, in part because the Biden administration encouraged them to. But some of the orders appear to bypass Congress or federal rule-making procedures, which could make them vulnerable to lawsuits and even resistance from within the Republican Party.
While framed as a way to revive the U.S. auto industry, the orders could cause U.S. carmakers to fall behind if they scale back their electric vehicle programs while Asian and European automakers continue perfecting the technology, analysts say. Already, 50% of car sales in China are electric or plug-in hybrids, and Chinese automakers like BYD are selling more cars around the world, taking customers away from established car companies, including U.S. manufacturers.
An executive order entitled “Unleashing American Energy” and signed by the president Monday instructs federal agencies to immediately pause disbursement of funds allocated by Congress that were part of the Biden effort to push the auto industry toward vehicles with no tailpipe emissions.
Among other things, the funds helped states to install fast chargers along major highways and provided tax credits of up to $7,500 for buyers of new electric vehicles and $4,000 to buyers of used models. The credits effectively made the cost of buying some electric cars roughly on par with prices for cars with gasoline or diesel engines.
Trump also rescinded an aspirational Biden executive order that called for 50% of new vehicles sold in 2030 to be fully electric, plug-in hybrids and vehicles that run on hydrogen fuel cells.
And Trump said the administration would seek to revoke California’s authority to establish air quality standards that are stricter than federal rules. That would have a broad effect. California is aiming for 100% of new car sales to be electric by 2035, and some of its standards are copied by at least 17 other states.
“The impact of this will 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 flags, as it has in other countries like Germany that cut incentives, she noted, carmakers could be left with costly, underused electric vehicle and battery factories.
“Federal funding for EV and battery manufacturing will be harder to access, increasing the risk of stranded capital for manufacturing projects already underway,” Natarajan said in an email.
Representatives of the fossil fuel industry celebrated the president’s action, while environmentalists lamented 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,” Mike Sommers, the president of the American Petroleum Institute, said in a statement, “and we applaud President Trump for moving swiftly to chart a new path where U.S. oil and natural gas are embraced, not restricted.”
Katherine García, a transportation expert at the Sierra Club, said: “Rolling back vehicle emission safeguards harms our health, our wallets and our climate. We will fight him at every turn of the road.”