If President Trump has his way, the auto industry’s transition to electric vehicles will soon be reversed. It would eliminate tax credits for electric vehicle purchases, federal grants for chargers, and subsidies and loans to help revamp assembly lines and build battery factories.
The executive orders issued by Mr. Trump on Inauguration Day amount to a radical repudiation of a central element of former President Joseph R. Biden Jr. on tackling climate change, which Republicans framed as a campaign to ban gasoline-powered cars.
The orders also pose a challenge to automakers that have invested billions of dollars in electric vehicles, in part because the Biden administration has encouraged them. But some of the orders appear to bypass Congress or federal rulemaking processes, which could make them vulnerable to lawsuits and even resistance from within the Republican Party.
Although framed as a way to revitalize the U.S. auto industry, the orders could cause U.S. automakers to be left behind if they curtail their electric vehicle programs while Asian and European automakers continue to perfect the technology, analysts say. Already, 50 percent of car sales in China are electric or plug-in hybrids, and Chinese automakers such as BYD are selling more cars around the world, taking customers away from established car companies, including American manufacturers.
An executive order titled “Unleashing American Energy” signed by the president on Monday directs federal agencies to immediately stop disbursing funds appropriated by Congress that were part of Biden’s push to push the auto industry toward zero-emission vehicles exhaust gases. Among other things, the funds helped states install fast chargers along major highways.
The main climate law of Mr. Biden’s inflation-reduction law also provided tax credits of up to $7,500 for buyers of new electric vehicles and $4,000 for buyers of used models. The credits effectively brought the cost of buying some electric cars to roughly the same level as prices for cars with gasoline or diesel engines.
Mr. Trump also rescinded an ambitious Biden executive order that called for 50 percent of new vehicles sold in 2030 to be fully electric, plug-in hybrids or vehicles powered by hydrogen fuel cells.
And Mr. Trump said the administration would seek to revoke California’s authority to set air quality standards that are stricter than federal rules. This would have a far-reaching effect. California aims to have 100% of new car sales be electric by 2035, and some of its standards are being copied by at least 17 other states.
“The impact of this is going to be significant,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity firm that invests in sustainable transportation.
If demand for electric vehicles shows up, as it has in other countries like Germany that are scaling back incentives, he noted, automakers could be left with costly, underutilized electric vehicle and battery factories.
“Federal funding for electric vehicle and battery manufacturing will be harder to access, increasing the risk of stranded capital for construction projects already underway,” Ms. Natarajan in an email.
Representatives of the fossil fuel industry celebrated the president’s action, while environmentalists lamented what they said was a serious setback in efforts to reduce greenhouse gas emissions and reduce urban air pollution caused by cars.
“This is a new day for American energy,” said Mike Sommers, president of the American Petroleum Institute, “and we applaud President Trump for moving quickly to chart a new course where US oil and gas are embraced. not limited.”
Katherine García, a transportation expert at the Sierra Club, said, “Reinstating vehicle emissions safeguards is hurting our health, our wallets, and our climate. We will fight him at every turn of the road.”
But the end result may not be as broad as the strong language in Mr. Trump.
Funds to encourage sales and manufacturing of electric vehicles were enshrined in legislation that the president cannot unilaterally repeal. Mr. Trump also can’t revoke rules that the Treasury Department and other government agencies have established to determine how the money will be distributed with the stroke of a pen. Any attempt to short-circuit the arduous process of proposing new regulations that includes seeking public comment will almost certainly provoke credible legal challenges.
The Energy Department has agreed to lend billions to automakers like Rivian, which will get $6 billion for a plant near Atlanta to make electric sport utility vehicles. The loan agreements, some finalized in the final days of the Biden administration, are binding contracts.
Much of the money has flowed into congressional districts in states like Georgia, Ohio, South Carolina and Tennessee, where Republicans dominate local politics. Their representatives may be reluctant to repeal laws that have brought jobs and investment to their districts. That’s a challenge for Republican leaders fighting for slim majorities in the House and Senate.
Ultimately, individuals and families will decide what cars to buy. Electric vehicles and plug-in hybrids are gaining market share not only because of subsidies, but also because they offer quick acceleration and lower fuel costs. Fossil-fueled cars have lost share, although that could change if financial incentives are removed from battery-powered cars and trucks.
The sharp change in political direction creates a dilemma for automakers. Some may welcome the president’s promises to roll back emissions and air quality standards that force manufacturers to sell more electric cars than they would like. But eliminating federal subsidies could upend their financial planning when most are struggling to make ends meet or grow their earnings.
The electric vehicle policies add to a climate of uncertainty and risk heightened by the president’s promise to impose 25 percent tariffs on goods from Canada and Mexico, major suppliers of cars and auto parts to the United States.
The U.S. auto industry “would be devastated by tariffs on assembled vehicles or parts at this level,” Carl Weinberg, chief economist at High Frequency Economics, said in a note to clients on Tuesday.
Some automakers appeared to applaud the president’s actions, while others were noncommittal.
“President Trump’s clear focus on policies that support a strong and competitive manufacturing base in the United States is extremely positive,” Stellantis, which owns Dodge, Jeep, Ram, Chrysler and other brands, said in a statement.
Mary T. Barra, CEO of General Motors, congratulated Mr. Trump on Monday at X and said the company “looks forward to working together on our shared goal of a strong U.S. auto industry.”
There is no sign that Elon Musk—Tesla’s chief executive and head of what Mr. Trump calls the Department of Government Efficiency — using his influence to soften the blow on electric vehicles. Tesla accounts for just under half of all electric cars sold in the United States, and nearly all of its vehicles qualify for $7,500 in tax credits.
Four of the 16 cars and trucks that can be purchased with the help of this tax break are made by Tesla. GM is the only automaker with more eligible models, at five. No other company has more than two eligible vehicles.
Mr. Musk has said in the past that the government should get rid of all subsidies and that Tesla will suffer less than other automakers. However, analysts note that Tesla’s sales and profits will be hit hard if Mr. Trump has successfully repealed or cut the electric vehicle tax credit, California’s clean air exemption and other such policies.
Tesla did not respond to a request for comment.
During an appearance before Trump supporters in Washington on Monday, Mr. Musk, who is also the CEO of SpaceX, expressed his delight that the president had promised to send astronauts to Mars. “Can you imagine how awesome it will be to have astronauts plant the flag on another planet for the first time?” said Mr. Mask He didn’t mention cars.
