US EV Sales at Risk as Nissan and GM Raise Concerns over Trump’s Proposed Cuts to Inflation Reduction Act

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The Future of US Electric Vehicle Sales

Carmakers have warned that tearing up the Inflation Reduction Act will hurt the growth of US electric vehicle sales, after former president Donald Trump’s advisers revealed plans to gut the country’s cornerstone green legislation if he is elected.

The Importance of the Inflation Reduction Act

The IRA is intended to drive EV manufacturing in the US by offering consumer incentives if they buy battery cars where certain parts are sourced from the US or its trading partners.

The Impact on Investment and EV Sales

The measure, which is intended to dissuade consumers from buying Chinese technology, has sparked tens of billions of dollars of investment into the US from battery and auto groups. However, industry executives now fear that without the incentives EV sales will stumble.

Carmakers’ Perspective

General Motors chief financial officer Paul Jacobson said the IRA had “tremendous benefit” to the EV market, helping stimulate sales. Nissan chief executive Makoto Uchida also stressed the positive impact of the measure on driving EV sales in the medium to long term.

The Current State of EV Sales

EVs made up 9 per cent of all new vehicle sales in the first nine months of 2023, according to data group BloombergNEF. The Biden administration wants electric vehicles to reach 50 per cent of all new sales by the end of the decade.

Line chart of  showing Electric vehicles reached nearly 9% US market share last year

The Role of Incentives in the US

In the US, the generous tax credits offered to consumers who buy EVs and to domestic manufacturers have helped carmakers increase their EV offerings. The companies are conscious that watering down the programme will also make it harder to sell the vehicles profitably.

Investment Risks for Foreign Companies

Analysts have warned that Trump’s plans have increased investment risks for foreign companies. Korean companies, in particular, have invested billions into the US, banking on the IRA to drive the transition to EVs more quickly. With EV sales not growing as expected, some of these investments are being scaled back.

Mitigating Risk

However, Korean battery makers have always planned for the possibility that the incentives would be withdrawn earlier than anticipated. They have set up joint ventures with US carmakers and are prepared for potential changes in the legislation.

Possible Consequences

If the IRA’s provisions were struck down by a Trump presidency, Republican politicians would have to explain themselves to voters in the red states that have received the most IRA-related investment. The question any Trump administration will have to face is: do they really want to be the authors of the downfall of the US auto industry?

Read More of this Story at – 2024-01-03 05:00:28

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