U.S. President Donald Trump has scrapped the 50% EV sales goal policy implemented by his predecessor, Joe Biden. On his first day as the 47th President, Trump said, “The United States will not sabotage our industries while China pollutes with impunity.”
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The 2021 policy targeted half of all new vehicles sold in the U.S. to be electric by 2030 to boost EV (electric vehicle) sales across the nation. It received support from U.S. automakers such as Tesla (TSLA), General Motors (GM), and Ford (F), along with international companies like Honda (HMC).
Trump Shifts Gears: Gas Cars over EVs
In an executive order, Trump also announced that he would stop the distribution of unused government funds, meant for vehicle charging stations. He also called for the termination of a waiver that allowed states to implement zero-emission vehicle rules by 2035 and stated that his administration would evaluate the possibility of ending EV tax credits.
Although Trump’s policy changes might make things harder for EV sector, car manufacturers will keep working towards electrifying their fleets. This is because they have already spent billions of dollars on factories, equipment, research, and advertising for electric cars.
Interestingly, the expected reversal of vehicle emissions and fuel efficiency standards under Trump will provide traditional automakers like Ford, GM, with an extended transition period to EVs, allowing them more time to sell vehicles powered by conventional engines.
Tesla Set to Benefit from Trump’s EV Policy Shake-Up
Analyst Dan Ives at Wedbush noted that the EV shake-up is generally negative for the industry, but for Elon Musk’s Tesla, this is significantly positive.
On X, the social media platform he owns, Musk wrote in July, “Remove the subsidies; it will only benefit Tesla.”
The end of government subsidies would hurt Tesla’s rivals more, potentially increasing their losses. That’s because, consumer tax incentives tend to benefit Tesla’s competitors more, as Tesla profits from its EVs, while other U.S. automakers usually face losses on their EVs. Tesla believes this change could severely impact its competitors, helping the company maintain its lead in the U.S. EV market.
Additionally, Trump’s presidency could lead to quicker regulatory approval for autonomous driving technology, which would benefit Tesla as it continues to develop self-driving cars.
Notably, Tesla’s market value grew by $300 billion since Trump won the elections.
Is Tesla Stock Rated a Buy?
On the flip side, Wall Street is currently hesitant about Tesla stock. According to TipRanks consensus, TSLA stock has a Hold rating based on 13 Buys, 12 Holds, and nine Sell recommendations. Moreover, the Tesla share price target of $329.63 implies a 22.7% downside from current levels.
In the last six months, TSLA shares have gained nearly 70%.
