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Trump’s presidential victory over Vice President Kamala Harris on Wednesday November 6 potentially means a different approach to EVs compared with President Joe Biden, complicating the process of electrification, industry sources said. Throughout his campaign, Trump made it clear that he is not a fan of battery-electric vehicles, instead vowing to boost fossil fuels and internal combustion engine (ICE) vehicles.
Fastmarkets’ research team forecasts that EV sales in the US will reach 9.55 million units by 2034 under a Trump presidency, 5% lower than forecast for a Harris-victory scenario during the same period.
“I would argue that the EV industry is poised for a setback under the Trump administration,” Fastmarkets energy storage system analyst Phoebe O’Hara said. “Trump is not known for his support of the green transition, and there is a significant likelihood that the Environmental Protection Agency’s (EPA) 2027 emissions rules, which currently push strongly toward EV adoption, are likely to be revised. This could result in the United States failing to meet its expected targets for EV adoption of 50% by 2030.”
Market participants in China are cautious about how the new presidency will affect the EV and battery industry, given that the policy details remain unknown and that Elon Musk, Tesla’s chief executive officer and major Trump supporter, might play a role in the future government.
“We are cautious about Trump’s presidency and not sure about a potential impact on the EV market. Trump’s re-election will very likely slow down the EV market growth in the US,” a South Korea-based battery producer said. “But I think it will have a very limited impact on the lithium market, given that that US EV market is very small in the world.”
Fastmarkets has heard that Trump’s re-election also created uncertainty over the IRA, which is a key driver for new energy supply chain development under the Biden administration, mobilizing $400 billion to support clean energy and address climate change through tax credits, grants and loans.
While it is unlikely that Trump could reverse the IRA in its entirety, considering Republicans’ vested interests in the IRA mechanism, it is likely that he could change its terms to make it more difficult for companies to qualify for subsidies, according to Fastmarkets’ battery raw materials demand analyst Connor Watts.
An anode producer in China said, “There are two issues to be addressed by the Trump presidency. One is his attitude toward new battery-related projects in the US on top of the huge money distributed into the EV industry under Biden’s term, and the other is how Musk’s addition will change the picture.”
Potential policy shifts in the US are leading to more conservative expansion plans for major battery raw materials along the supply chain, according to sources.
“Our operation in Germany is facing obstacles after a Trump win,” a battery raw material producer said. “Trump’s policies, although they haven’t been officially outlined, will probably get rid of IRA incentives and focus less on EVs. At that point, our Germany operations will have no advantages, especially compared with those in China and Indonesia.”
A second battery raw material producer said, “It is also risky for operations in other North American countries. We announced a delay of one project in the region [on Wednesday] just after the election result. Trump’s protectionist trade policy means that it is not enough for investors to set up just the battery plant or the cathode plant. It means the whole supply chain [must be] within the US, which means increasing capital expenditure for producers seeking to construct the supply chain locally.”
Even for existing Chinese battery projects in the US, whether through equity or licensing agreements, there is a high probability that these projects may encounter difficulties and not proceed as smoothly as anticipated, Fastmarkets heard.
Trump is expected to pursue protectionist policies to shift manufacturing within the country, Fastmarkets heard.
Lithium-ion cells for EVs already face a 25% tariff, and EVs a 100% tariff, under the Biden administration, and from 2026, the 25% tariff will also apply to energy-storage cells.
Market participants mostly downplayed the effect of any potential tariff increase on EVs exported to the US from China, given that the country only accounts for a small share of China’s EV exports.
But the risk persists because Trump has strongly opposed the presence of Chinese companies establishing operations in Mexico, a battery maker source in China said, adding that he could place tariffs on Mexico-based Chinese companies or Chinese companies based in any other country and looking to sell in the US.
“Trump had proposed to put a 200% tariff on cars produced in Mexico if they target the US market,” the battery maker source said.
The president-elect has also proposed a 60% tariff on all Chinese imports and a 10-20% tariff on imports from other countries under his presidency.
For battery raw materials, potentially higher tariffs add risk to cobalt metal producers in China and Indonesia, according to sources.
Currently, the US imposes a 25% tariff on Chinese cobalt metal imports, yet US imports from China remain substantial.
From January to September, US imports of Chinese cobalt metal ranked second in total Chinese cobalt export destinations, amounting to 480 tonnes, or 8% of the total 5,992 tonnes, according to data from China’s General Administration of Customs (GACC).
A 60% tariff could drastically reduce and potentially eliminate these imports to the US, sources said.
“In addition, fluorspar, a raw material for battery electrolytes, is affected by a potential high tax raise negatively impacting China’s EV export and, therefore, the lithium battery materials industry. This might result in a halt on the uptrend in China’s fluorspar prices in recent years if demand for battery materials slows,” a Chinese fluorspar producer said.
A few market participants expect a short-term increase in demand, given that buyers might restock before the end of the Biden administration, but most tend to be less positive about the battery raw materials market in the near term.
“In the short term, it is a headwind for the lithium market, given [Trump’s] unsupportive stance over the EV industry, and it’s reflected in the lithium carbonate price on the Guangzhou Futures Exchange (GFEX) [on Wednesday]. But in the medium-to-long term, it’s still dependent on what specific policies he will adopt,” an industry source said.
The most-active January GFEX lithium carbonate futures contract closed at 75,900 yuan ($10,578) per tonne on Wednesday after bottoming at 74,750 yuan per tonne earlier in the day; the contract had opened at 77,500 yuan per tonne.
Until policy details are clear, demand weakness and oversupply will continue to pressure the market, a cobalt metal trader said. EV growth in Europe has been negative from January to September, and Trump’s unfavorable stance toward EVs is sending additional bearish signals, the trader added.
In the coming months, the market will realize if there will be more stimulus policies from China as Beijing ends the Standing Committee of the National People’s Congress on Friday November 8 and the Trump administration details its policies clarifying its approach to the US’ energy transition landscape, Fastmarkets heard.
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