Donald Trump has promised that during his second term he will rein in the tyrannical electric vehicle mandates that have put U.S. automakers in precarious situations the past four years. But some are suggesting that as bad as the mandates are, revoking them could make things worse.
In essence, they’re suggesting that the damage is done, the investments are made, so they need to somehow generate a return on those investments before Trump pulls the plug on the mandates.
A report by Brady Knox over at Washington Examiner, commenting on a NY Times article, suggests car companies may ask President Trump to keep Joe Biden’s rules in place for now:
According to a report from the New York Times, the Biden administration’s actions to boost domestic EV manufacturing may have already set the auto industry past the point of no return. Following Biden’s initiatives, automakers have already invested billions of dollars in transitioning to electric vehicles. If Trump were to scrap the initiative, major automakers fear they could be undercut by smaller manufacturers producing cheaper, internal combustion engine cars.
Three of the country’s largest automakers, Ford, General Motors, and Stellantis, are already lobbying Trump against scrapping the rules.
Some had hoped that one of the biggest proponents of electric cars, Tesla CEO Elon Musk, would be able to sway Trump to keep those rules in place, but now, his priorities seem to be cutting regulations. He expressed opposition to the $7,500 tax credit for buyers of electric cars, saying he opposes all subsidies.
“In my view, we should end all government subsidies, including those for E.V.’s, oil and gas,” Musk said last week.
Musk’s calculation was more cynical in a July earnings call, speculating that the end of the subsidy would hurt Tesla somewhat, but hurt its competitors much more.
Is it worth keeping the mandates so the big three U.S. automakers can prevent smaller competitors from eating their lunch?
Nope, Not Worth It
As horrible as the situation is for major U.S. automakers, keeping the mandates in place would be far worse. Americans need relief far more than automakers right now. Getting the price of vehicles down to a manageable level is crucial if America is going to have any chance of recovering from the financial decimation we’ve felt for the last four years.
But there’s actually a good business reason for pulling the mandates immediately. The Biden-Harris regime forced automakers to try to usher in a future that was too far off, but that doesn’t mean OPTIONAL electric vehicle adoption isn’t part of the future.
The damage has been done by the mandates, but there have also been significant investments into research and development that can flourish if they’re allowed to transition without government interference. In other words, they can return to internal combustion engines as the primary driver for now to get their revenues back while reducing costs for American consumers. Simultaneously, they’ll be expanding on what they’ve built in EV infrastructure, albeit without mandates forcing the issue. They’ll be able to work at the speed of the market instead of the mandates.
It’s a sour consolation for the biggest automakers because it means they’ll have to wait years or even decades to realize benefits from their electric vehicle investments, but the long-term returns should be worth the wait… if they can survive long enough to see them.
Rather than using the current rules to stifle competition, they should hope that President Trump immediately sides with the free market and the consumers to allow enough short-term benefit for U.S. automakers to recover.
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