WASHINGTON: In a major policy shift, US President Donald Trump has made electric vehicles (EVs) a focal point of his first-day agenda. Trump signed an executive order titled “Unleashing American Energy” on January 20, aiming to promote a “level playing field” for gasoline-powered vehicles while halting federal funding for new Electric Vehicle charging infrastructure.

The order hints at further changes, including the possible removal of federal tax credits for EV purchases and the withdrawal of California’s authority to impose stricter emissions standards. Trump’s inaugural remarks included sharp criticism of the Biden administration’s climate initiatives, including EV incentives, which he described as part of the “Green New Deal.”

Although Trump has frequently criticized EVs, experts believe his administration might not completely dismantle Biden-era programs. A significant portion of federal EV funding has already been allocated to Republican-controlled areas, where thousands of new jobs are expected.

On global markets, shares of EV manufacturers like Rivian and charging infrastructure companies such as EVgo saw a sharp decline following Trump’s announcement. Tesla, led by Trump ally Elon Musk, also experienced a drop in stock value.

Kathy Harris, clean vehicles director at the Natural Resources Defense Council (NRDC), called Trump’s policies a favor to “wealthy oil executives” and emphasized the environmental and economic benefits of EVs. She warned that these actions could face substantial legal challenges.  “If the administration bypasses legal processes, it will end up in court” she said.

The Alliance for Automotive Innovation also weighed in, urging  for a unified national approach to auto regulations. The group’s president, John Bozzella, stressed the importance of balancing industry standards with consumer demand. “We need a single, national standard to cut carbon emissions in transportation,” he said.

A Shift in Focus

Trump’s executive order comes as automakers reassess their EV strategies amidst slowing growth. Despite a 7.3% increase in EV sales in 2024, reaching 1.3 million units, major players like General Motors and Ford have scaled back some EV investments. Industry leaders cite a potential oversupply of EVs by 2025, which could put significant pressure on pricing.

During his campaign, Trump accused Democrats, including Vice President Kamala Harris, of attempting to force EV adoption on Americans. In contrast, the Biden administration had introduced stricter fuel economy rules to lower carbon emissions and passed substantial funding through the Inflation Reduction Act (IRA) and the 2021 infrastructure law to promote EVs.

Programs under these laws are in various stages of implementation. Trump’s new executive order calls for a 90-day review to ensure federal spending does not disproportionately benefit EVs at the expense of other vehicle types.

The Road Ahead

While experts believe it is unlikely that Trump’s administration will attempt to reclaim funds already allocated, there is uncertainty about how ongoing projects might be affected. According to the NRDC, nearly half of the $5 billion designated for EV chargers under the 2021 infrastructure law has already been allocated to states.

Safeguards built into the law are expected to maintain investment continuity. However, the administration’s drastic measures could face both legal and practical challenges. For instance, the Department of Energy recently approved major federal loans for EV and battery manufacturing facilities, including a $6.6 billion loan to Rivian for a new plant in Georgia and a $7.5 billion loan to StarPlus Energy for lithium-ion battery production in Indiana.

Whether Trump’s administration will halt these projects remains uncertain, but any such moves are likely to face intense legal scrutiny and opposition.