By Ray Birch
WASHINGTON—Will Donald Trump’s administration slow down the nation’s drive toward electric vehicles, and will that impact EV resale values—forcing lenders to carefully value EV collateral?
Those questions have been raised by analysts following Trump’s win in November. Reuters recently reported that Trump's transition team is working to eliminate the $7,500 consumer tax credit for electric vehicle purchases.
“This move is potentially part of broader tax reforms and could affect the U.S. transition to electric vehicles,” GlobalData said.
The proposed repeal is under discussion by a transition team led by oil magnate Harold Hamm and North Dakota Governor Doug Burgum. Tesla has indicated support for ending the subsidy, Global Data added.
Tesla CEO Elon Musk mentioned that while removing the credit might slightly hurt Tesla sales, it would be "devastating" for competitors like General Motors.
Jeff Schuster, vice president research automotive at GlobalData, said he anticipates the transition to electric vehicles in the U.S. will be hindered under Trump's administration.
Decrease In Market Share
Scot Hall
“His focus on reducing oil/fuel prices and rolling back emissions standards could lead to a 15-20% decrease in the market share of battery electric vehicles in the U.S. by 2030, compared to our base forecast,” Schuster said. “This will depend on the extent to which the administration cuts investments in infrastructure and eliminates the leasing tax credit under section 45W of the Inflation Reduction Act.”
Prior to Trump’s win in November, the Wall Street Journal noted that electric cars have gone from “pricey purchases to some of the biggest bargains on the used-car lot, as resale values for the vehicles have tumbled.”
The Journal pointed out that in September, the average selling price of a three-year-old electric vehicle was about $28,400, less than that of a gas-engine vehicle of the same age and a 25% drop from the start of 2023, according to car-shopping website Edmunds.
“The sharp fall in the price of preowned EVs stands in contrast to the broader used-car market, where values have stayed steady during the same period, according to the firm’s data,” the Journal said.
Scot Hall, EVP at Swapalease.com, spoke to CUToday.info about what may lie ahead for EVs.
He noted that higher interest rates have been a factor contributing to greater negative equity in EVs.
“Government EV subsidies significantly contribute to steeper depreciation,” as well, Hall said. “Overall, I think it is simply too early to tell at this point. I agree that ICE vehicles are back in play more due to the upcoming change in administration, while other counter factors also exist. It appears Elon Musk will be heavily involved, which is a wildcard. Aside from autonomous driving, GM is making significant strides with EV affordability, as well as other manufacturers too.”