Presidential election ’24: Implications for the auto finance industry

For the automotive industry, today’s election is defined by uncertainty as candidates Kamala Harris and Donald Trump take different stances on several key auto finance-related issues, including the future of electric vehicles. Harris supports U.S. EV and battery supply chain manufacturing and job growth in the automotive sector, according to the White House. Harris also has pledged to continue the initiatives introduced in the 2022 Inflation Reduction Act (IRA), which included government grants for the domestic production of EVs. The IRA also established the $7,500 tax credit that OEMs have used to incentivize EV lease deals . Trump, however, plans to “cancel the electric vehicle mandate,” according to his campaign website. While there is no federal EV mandate, Trump is likely referring to the push toward zero-emission vehicles. The Environmental Protection Agency released new rules on vehicle emissions last March. The EPA expects that EVs could account for up to 56% of new passenger vehicles sold for model years 2030 through 2032 because of the new rules, according to an EPA fact sheet. Trump has also indicated numerous times during the campaign that he would try to repeal parts of the IRA, which could include the EV tax mandate. “We believe if Trump wins, one of the first things he will do is pull the EV tax credit,” Daniel Ives , managing director and senior equity research analyst at Wedbush Securities , told Auto Finance News . “This would be a gut punch for the EV industry but a potential positive for Tesla and [Elon] Musk given its scale advantage.” Under a Trump presidency, EV leasing could be affected, Peter Glenn , co-founder, co-CEO and head of marketing at EV Life , told AFN . Nearly 46% of new EVs were leased in the second quarter, according to Experian . “If Trump wins, the biggest thing that could be on the chopping block for change is the loophole ... that allows any automaker, regardless of battery manufacturing sourcing, to pass through the tax credit on a lease,” Glenn said. “It's basically an exception that allows for offshoring battery production, which is not something that the new Trump administration might care about; Harris might also want to revisit that, as well.” Removing the tax credit, however, would likely need the full support of Congress, Glenn said. “It could be possible, but it would take a lot of political will and getting all houses of Congress united,” he said. Tariffs on China One area where the candidates have some common ground is committing to tariffs on China, although the two have different approaches. Trump’s proposed tariffs are stiffer than his efforts during his first presidential term. Trump has floated a 60% tariff on all goods made in China, which could lead to a loss in revenue for the United States government, according to a report from the Committee for a Responsible Federal Budget . Meanwhile, Harris has signaled support for continuing the Biden administration’s targeted approach to Chinese tariffs, including tariffs announced last May that went into effect in September. The move increased the tariff to 100% on electric vehicles, 50% on solar cells and 25% on EV batteries, according to the U.S. Trade Representative’s Office . Tariff hikes on other goods, including semiconductor chips, will follow over the next two years, per the Biden tariffs. Other areas of note Trump at an October rally touted an auto loan interest tax deduction , but has offered few details about the proposal. Meanwhile, Harris received an endorsement from the United Auto Workers union on July 31, and the union’s president, Shawn Fain , joined Harris on the campaign trail on a few occasions.

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Presidential election ’24: Implications for the auto finance industry

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