Automakers banking on EV sales may need to buckle up in 2025
Posted By RichC on January 4, 2025
After four years of inflation impacting everything Americans need and want, the optimism for improvement might not come all that easily to the next administration. Wages are struggling to keep up with prices, and although the Fed has started an easing cycle with rate cuts, everyday citizens don’t see that when it comes to necessities or financing a big ticket purchase, be it a home or a new vehicle.
If automotive shoppers do find themselves fortunate enough to afford a home and can consider a new car, they are often faced with the decision to buy a gasoline powered car or an EV (semi-interested in a Tesla myself). For many, its a logical choice EVEN if there is a tax credit considering the relatively poor charging infrastructure (damaged, unreliable, out-of-order, etc), concerns for repairs and reliability or resale values.
The Trump administration is likely to not be as friendly to EV automakers which could mean higher demand for hybrid vehicles or their fossil fuelled counterparts (???) — most auto industry watchers suspect the tax credits for EVs will be either reduced or eliminated. Big automakers may be able to absorb some of the higher cost to make EVs … but will likely see fewer sales no matter their discounting. The scenario does not look good, at least for 2025 if you are an investor or employed in that industry (see Al Root’s 12/31/2024 Barronsonline article — or PDF).
Key takeaways from the Barron’s Advisor editorial team
Electric-vehicle makers and investors should buckle up for 2025, because President-elect Trump could eliminate EV purchase tax credits for as much as $7,500 a vehicle.
That would be a de facto price increase on most electric cars and likely would stifle demand.
Germany presents an example of what could happen. The country cut purchase subsidies for EVs, and EV sales there plunged during the first 11 months of this year.
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