Former President Trump’s recent policy reversal on electric vehicle sales targets has led to a decline in stock prices for key automotive and battery manufacturers. Despite this, analysts believe global demand for electric vehicles will continue to rise, particularly in China, which dominates the market. Regulatory changes, including reduced support for EVs and tighter import restrictions, may impact U.S. demand, but optimism remains regarding the long-term growth of the EV sector and critical mineral requirements.
Trump’s Regulatory Shift and Its Impact on Electric Vehicle Demand
On Tuesday, former President Trump announced the revocation of a significant policy established by his predecessor, Joe Biden, which aimed to ensure that by 2030, half of all new vehicles sold in the United States would be electric. This policy had prompted automakers to prepare for a surge in demand for electric vehicles (EVs), anticipating a shift in consumer preferences.
The reversal of this decree resulted in a noticeable decline in stock prices for Japanese automakers, South Korean battery manufacturers, and lithium miners from Australia, the U.S., and China. Despite this setback in the second-largest automotive market globally, industry analysts believe that any decrease in U.S. demand will be offset by growth in other regions.
Global EV Market Dynamics Despite U.S. Changes
Trump’s administration is also set to introduce additional regulatory changes aimed at reducing support for electric vehicles and charging infrastructure, alongside tightening restrictions on the import of automobiles and battery materials from China.
Glyn Lawcock, an analyst at Barrenjoey, commented on the situation, stating, “Whenever subsidies or benefits are removed, the demand scenario takes a hit. However, demand for electric vehicles is likely to continue its upward trajectory, even if the pace slows in the U.S. under Trump’s influence.”
According to Antonino Ottaviano, CEO of Liontown Resources, the global shift towards electric vehicles is progressing, regardless of U.S. policy changes. He remarked during a conference call, “In the longer term, I don’t foresee any issues affecting demand.” Liontown executives highlighted that the majority of growth in the EV sector is occurring in China, which currently accounts for 65% of the global market with 11 million sales, while North America makes up only 20%.
Furthermore, the rest of the world has already recorded 1.3 million EV sales, showing a remarkable growth rate of 27% year-on-year, a trend that is projected to surpass North America’s total market within two years. This robust growth is particularly appealing to Chinese EV manufacturers, who have been affected by the 100% tariffs imposed by the Biden administration on their vehicles.
In tandem with the increasing demand for EVs, grid-scale batteries capable of storing extensive amounts of electricity are gaining traction globally. Critical metals are essential not just for EV production but also for consumer electronics and the necessary infrastructure for the artificial intelligence sector.
Albemarle, the leading lithium producer worldwide, chose not to comment on the recent regulatory changes. Similarly, Arcadium, a lithium firm set to be acquired by Rio Tinto, was unavailable for immediate statements. However, Rio Tinto’s CEO, Jakob Stausholm, expressed optimism regarding lithium demand at the World Economic Forum, projecting a fivefold increase in the next 15 years and emphasizing the need for more lithium projects.
David Klanecky, CEO of Cirba Solutions, a company specializing in battery recycling, anticipates a significant rise in U.S. demand for critical minerals by 2030, driven by both the electric vehicle market and the growing array of electronic devices.
Despite the reduction in federal targets, miners remain hopeful that initiatives aimed at decreasing reliance on Chinese supplies will bolster the demand for their metals. Darryl Cuzzubbo, CEO of the Australian rare earth developer Arafura, stated, “We believe that efforts to enhance supply chain independence from China will have a much more substantial effect than the rollback of formal electric vehicle sales targets.” He concluded with a positive note about the approaching tipping point for electric vehicles, after which targets and incentives may no longer be necessary to foster adoption.