While the inauguration of President Donald Trump may have sent a shudder through the boardrooms of electric vehicle (EV) producers, boosting the US EV market during his term may be the best way to keep Republicans in the White House in 2028.
President Trump has been highly critical of the EV market in previous years, and aims to abolish the $7,500 consumer tax credit for EVs.
Despite this, a combination of the Inflation Reduction Act (IRA), corporate tax breaks, support for Tesla owner Elon Musk and, counter-intuitively, an oil boom, could herald the start of the good years for the US EV market. And a Trump administration would be foolish to resist it.
IRA boosts key swing states
Donald Trump ran on a manufacturing ticket. Among his slogans were "drill baby drill" and an evolution of the MAGA tagline: "Make America Greater Than Ever Before". That second slogan cannot be achieved without manufacturing the technologies of the future, including EVs, and thanks to former president Joe Biden those jobs might land in key areas for the 2028 campaign.
The US EV market has had a slow start to the latest phase of expansion, lagging behind as Europe and China boomed in 2022-2023. This changed last year, as US EV sales in 2024 rose by 7.2pc and totalled 1.3mn, according to Cox Automotive. Momentum is starting to build. The Inflation Reduction Act (IRA) passed under Biden's tenure has become a catalyst for EV investment, much of it in key swing states and red states. This makes it unlikely the Trump administration will roll back any of the government money allocated to projects since the IRA was passed.
In a study from August 2024, US clean energy think-tank E2 discovered nearly 60pc of the announced projects under the IRA are based in Republican congressional districts.
Of all new projects, Republican districts represent 85pc of investment and 68pc of jobs. Of the top 20 congressional districts for clean energy investments, 19 are held by Republicans.
The largest of these investments so far, Toyota's $13.9bn EV production plant, is in the key swing state North Carolina, which Trump won by a 183,000 vote margin in 2024. The Toyota plant will create up to 5,000 jobs, most of which are due to start during Trump's second term. wOther swing states have multiple projects supported by the IRA. Michigan, Georgia, South Carolina, Texas and North Carolina have over 20, while Ohio, Tennessee, California, New York, Indiana and Arizona have more than 10. Most of the states with multiple projects are key marginals which were pivotal for a Trump victory in 2024, except California and New York. Unfortunately for Biden, the benefits of his flagship legislation were too late to save the presidency for the Democrats, but they may benefit Republicans next time around.
Big tech and big oil
The new Trump administration is filled with contradictions, which are likely to expand into open conflict. Nowhere is this more evident than the contrast between interests of Tesla founder Elon Musk and Trump's "drill baby drill" policy.
Although Musk has rolled back some his more fervent views on climate change, he still supports a transition to EVs, led by Tesla. His competition in the oil industry have also started to shift their policies on electrification.
Both ExxonMobil and Saudi Aramco, two leading oil majors, have announced investments into lithium extraction over the last year.Trump's promised tax cuts and oil licence bonanza may give them a windfall of cash just at the point that oil executives are looking to put money into the electric transition. Despite his pro-fossil fuel rhetoric, Trump may leave office having presided over an increasingly green America.
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