For investors in the auto sector, the 2024 US presidential election is not an event to ignore. Changes in the White House, Senate, or House of Representatives can all impact environmental policy, the regulatory environment, and trade negotiations.one of The biggest area to watch is the potential for disruption from federal taxes and incentives for transitioning to electric vehicles. Stephanie Brinley, director of global mobility at S&P “There is,” he pointed out.
background
Democratic-led legislation passed under President Joe Biden has had a major impact on the development of the electric vehicle industry. The Inflation Control Act and the bipartisan infrastructure law both supported ongoing EV projects and helped increase EV adoption rates in the U.S., albeit at a slower pace than some expected. S&P Global Mobility predicts that if the 2024 U.S. presidential election results in a Republican-controlled White House and Congress, the new administration could consider reining in existing laws and changing or eliminating federal funding. I believe. Withdrawal or reduction of federal subsidies may cause OEMs, suppliers, and battery companies to reconsider their product and investment strategies, particularly as they relate to sourcing in North America. While former President Donald Trump and other Republican leaders have criticized EVs as being too expensive, the fact that more than half of the new clean energy projects announced since the EV-friendly bill was passed are Republican-led projects. The problem is complicated by this. Depending on the district, it may be difficult for some people to withdraw. Another factor up for debate is whether the change in administration’s tougher stance on trade could lead to new tariff battles, in which case some U.S. manufacturers and suppliers’ short-term There is a risk that profitability will decline again.
Looking to the future
S&P believes the election could also have an impact on greenhouse gas emissions and fuel efficiency regulations. A Republican administration could roll back the regulations and rescind California’s clean air and climate exemption. However, S&P reminded that NHTSA is required by U.S. law to set standards at least 18 months in advance of the model year. This means that if a new president were to take office in January 2025, regulatory changes would need to be passed almost immediately to affect 2027 models. S&P believes that the earliest model year realistically affected by the new changes will be the 2028 model year. S&P Global Mobility’s baseline forecast assumes that current emissions and fuel efficiency regulatory proposals are finalized and that IRA laws remain in place and unchallenged. But in the event of election disruption, the ratings agency sees automakers potentially responding in several general categories.
player
Automakers seen as potentially in a position to adjust production and vehicle offerings amid uncertainty include Hyundai Motor Group ( OTCPK:HYMTF ) and, to a lesser extent, Ford Motor Company (New York Stock Exchange:F). It was noted by S&P that Hyundai Motor Group (OTCPK:HYMTF) has a dedicated BEV platform and plans to expand its offerings, although most of its existing Hyundai and Kia products currently include ICE, hybrid , offers PHEV solutions, and some products also offer BEV on the same platform. When regulations ease, Hyundai is ready with hybrid and PHEV solutions. Ford (F) also has more hybrid and his PHEV solutions available to expand your vehicle program as needed. The Detroit automaker’s plan to offer fewer models on its EV platform and focus on increasing production of a more limited range of products is also seen as a potential benefit. Because delays in planned EV production capacity mean delays in fewer vehicle programs. General Motors (GM) is expected to review its EV product plans and discontinue some products, but having more brands to adjust than Ford (F) could pose a challenge. Meanwhile, Nissan (OTCPK:NSANY), Honda (HMC), and Mazda (OTCPK:MZDAY) have all indicated plans to increase electrification and BEVs, but are moving quickly to meet the needs of the U.S. market. There are no companies. When it comes to all-electric vehicle players, check out Rivian Automotive (Nasdaq: Riven), Fisker (FSR), and Lucid Group are all expected to move forward with production plans no matter which party wins the election, but each would be likely to pursue new plans if EV taxes and manufacturing incentives are repealed. may face challenges. EV giant Tesla (NASDAQ:TSLAThe Austin-based company could walk into a minefield if its plans to build a large EV factory in Mexico become a political issue. Meanwhile, European automakers Stellantis (STLA), BMW (OTCPK:BMWYY), Volkswagen (OTCPK:VLKAF), and Mercedes-Benz (OTCPK:MBGAF) are developing major models and manufacturing plants based on the U.S. EV environment. may change its decision. Analysts say waning support for electric vehicles in the U.S. could be a tailwind for Chinese automakers NIO (NIO), XPeng (XPEV) and Li Auto (LI) as they look to expand in other markets. It is pointed out that there is. VinFast Auto (VFS) is also an Asian automaker designed with increasing global EV market share in mind.
Auto suppliers also face an election wild card, as many of their major customers could become cautious in the first three quarters of the year if the outcome is uncertain. The sector has already had a tough start to the year, with Mobileye Global (MBLY), Luminar Technologies (LAZR), Hyzon Motors (HYZN), Innoviz Technologies (INVZ), and SES AI Corporation (SES) , American Axle & Manufacturing (AXL), Cooper-Standard Holdings (CPS), Stoneridge (SRI), Aptiv (APTV), Westport Fuel Systems (WPRT), and Dana (DAN).
The auto sector is also attracting a lot of short bets in 2024. Automotive stocks with short positions greater than 10% of total float include Fisker (FSR), Lucid Group (LCID), Faraday Future Intelligent Electric (FFIE), VinFast Auto (VFS), Workhorse Group (WKHS), and Rivian Automotive. (RIVN), Luminar Technologies (LAZR), Canoo (GOEV), Polestar Automotive (PSNY), Mobileye Global (MBLY), QuantumScape (QS), and LCI Industries ( LCII). Volatility may be just beginning for some of these names.