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Wells Fargo Analyzes Automotive Industry Following Trump’s Inaugural Address
In the wake of President Trump’s inauguration speech, Wells Fargo (NYSE:) released insights regarding the automotive sector, focusing on potential risks and the timeline for anticipated policy changes. The firm did not find any new revelations concerning Trump’s stance on electric vehicle (EV) incentives or the Green New Deal.
During his address, President Trump reiterated his goal to eliminate the $7,500 tax credits available to EV buyers under the Internal Revenue Code (IRC) and indicated a shift in support towards fossil fuel initiatives. Analysts at Wells Fargo project that legislative efforts to abolish these credits could emerge by May.
The firm also expects forthcoming details regarding the enforcement of fuel economy regulations and the recently granted waiver to the California Air Resources Board (CARB) to be released in the approaching weeks. Trump’s language surrounding tariffs was observed to be less confrontational compared to past statements, suggesting a potential decrease in immediate threats to the automotive sector.
According to the analysts, any revisions to the fuel economy regulations set by the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) might not materialize until around 2028. However, they anticipate an imminent announcement regarding the postponement of these regulations and the possible termination of CARB’s waiver, which could trigger legal disputes.
Concerning the EV tax credits, Wells Fargo indicates that their discontinuation is likely to be incorporated into the budget reconciliation discussions. It is expected that Speaker Johnson will put forward one or two related bills by Memorial Day, with the possibility that these credits may be terminated soon after, without any transitional period for consumers.
The removal of these credits could significantly impact Tesla (NASDAQ:), as a majority of their vehicle lineup currently qualifies for the tax incentives, whereas only 31% of non-Tesla EVs are eligible. General Motors (NYSE:), too, has a substantial portion of its models benefiting from these credits.
Finally, the analysts note a change in Trump’s approach to trade policy. While the imposition of tariffs remains a possibility, his administration appears inclined to reassess current tariff structures and trade agreements. They are considering the establishment of an external revenue service dedicated to tariff collection. Such a strategy could lead to major ramifications for vehicles and components manufactured in Mexico, particularly affecting the major U.S. automakers in Detroit.
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