Concerns are growing among domestic businesses as former U.S. President Donald Trump has pledged to nullify President Joe Biden’s electric vehicle transition policy if elected in the 2024 presidential election.
Former U.S. President Donald Trump recently criticized President Biden’s electric vehicle promotion policy as “a product of madness” on social media, citing “this policy would lead to all electric cars being made in China and the greatness of Michigan’s automobile industry will cease to exist.” He further urged support, saying, “If the United Auto Workers (UAW) wants to protect jobs and cars, vote for me. I will stop this madness, immediately!” As the UAW, representing the workers of the three major U.S. automakers – General Motors, Ford, and Stellantis – initiated a strike, former President Trump actively sought to garner support.
The UAW commenced a large-scale strike, citing concerns not just about wage increases but also about President Biden’s rapid electric vehicle transition policy. The UAW is particularly worried about the breakneck speed of the electric vehicle transition. With a workforce reduction of approximately 30 percent compared to internal combustion engine cars for producing a single electric vehicle, anxiety about future job security was already significant. However, when President Biden intensified his focus on the shift away from internal combustion engines, UAW’s concerns reached their peak, according to prevailing analyses.
The Biden administration has been accelerating its efforts towards electrification, including the establishment of a policy to sell 67 percent of new cars as electric vehicles by 2032. Even on Sept. 4th, Labor Day, President Biden highlighted the Inflation Reduction Act (IRA) as one of his notable achievements, emphasizing its provision of subsidies exclusively for North American-made electric cars.
With Biden and Trump holding distinct views on the IRA and electric vehicle transition policy, the upcoming U.S. presidential election is expected to be highly unpredictable. This uncertainty is also extending to domestic companies invested in the United States. According to a recent opinion poll conducted by Emerson College, former President Trump’s approval rating stands at 59 percent, marking a 9-point increase from the previous month. In a hypothetical head-to-head matchup, President Biden and former President Trump both secured 45 percent approval ratings, highlighting a tight race ahead.
The domestic electric vehicle and battery industry has poured a total of 74 trillion won (US$55.18 billion) into the United States during the Biden administration’s tenure. Hyundai Motor Group, for instance, is investing 7.8 trillion won (US$5.82 billion) to establish Hyundai Motor Group Metaplant America (HMGMA), a new electric vehicle factory, in the U.S. state of Georgia. It has been reported that there are considerations to expedite the completion of this project to take advantage of IRA benefits.
The battery industry has also committed to substantial investments. LG Energy Solution is jointly investing 5.7 trillion won (US$4.25 billion) with Hyundai Motor Group to build a joint factory to produce batteries for local factories of Hyundai and Kia, including HMGMA. They have also reached agreements with GM, Stellantis, Honda, and others to establish battery factories. Moreover, SK On is planning to invest a total of 6.5 trillion won (US$4.85 billion) in building a joint battery factory with Hyundai Motor. Samsung SDI has also decided to establish a joint factory with Stellantis and GM, with a total investment of 12 trillion won (US$8.95 billion).
What’s worse is that even the major European market is now adjusting the pace of electric vehicle adoption. On Sept. 20 (local time), U.K. Prime Minister Rishi Sunak announced a 5-year delay in the ban on the sale of internal combustion engine cars, moving it from 2030 to 2035, citing concerns about imposing excessive burdens on consumers. This abrupt change in plans by the U.K. has faced resistance from the automotive industry, which had been rushing to accelerate the transition to electric vehicles by 2030.
There are also indications of moves to weaponize subsidies to protect domestic industries. The French government plans to implement a subsidy reform from next year that will provide different levels of subsidies based on the production location of electric vehicles. It is anticipated that electric vehicles produced outside of Europe will receive minimal subsidies. While this move aims to counter Chinese-made electric vehicles, there is also a significant possibility that the domestic industry might see collateral damage.