Markets for the most part reacted positively to Donald Trump’s 2024 US election victory, with Wall Street’s main indexes jumping to record highs, but some auto industry stocks hit multi-year lows over fears of punitive tariffs and a turn-back on electric vehicle policies.
While Tesla shares surged by 15% on news that Elon Musk would be appointed as head of a government efficiency commission, shares in BMW, Volkswagen, Porsche and Mercedes-Benz fell by between 5.2% and 7.7%, Reuters reported. The US is Germany’s biggest export market for cars, accounting for 12.9% of its vehicle exports.
As BMW stock hit four-year lows, CEO Oliver Zipse sought to assure investors that punitive tariffs under Trump, which have been threatened for Europe, would not affect the company significantly as its Spartanburg plant in North Carolina currently produces over 400,000 vehicles per year in that country.
China’s largest EV maker BYD saw its shares drop by 3.6%, while US-listed Nio and Li Auto lost 5.3% and 3.3% respectively, NBC Los Angeles reported.
Trump has previously mooted a 10% tariff on imports from all foreign nations and a much higher 60% tariff for Chinese imports. While most global automakers have factories in the US, they still rely on imports to flesh out their model ranges to meet consumer demand.
South African vehicle manufacturing operations could also be affected by the Trump presidency.
For instance, some exporters rely on the African Growth and Opportunity Act (AGOA) for duty-free access into the US market. Should this trade policy be done away with under a more protectionist US government, it would certainly have a detrimental effect on local manufacturers that export to the US.
Uncertainty over electric cars
Jeff Schuster, Vice President Research Automotive at GlobalData, said the global auto sector could see a significant mid-term impact from the new Trump Presidency in the areas of trade, electric vehicle (EV) transition and regulations.
“We anticipate that the current state of protectionism will be intensified under Trump, with Chinese imported vehicles and technology being targeted.”
Schuster said the transition to EVs would be hindered under Trump’s administration.
“His focus on reducing oil/fuel prices and rolling back emissions standards could lead to a 15-20% decrease in the market share of battery electric vehicles (BEVs) in the US by 2030 compared to our base forecast.
“This will depend on the extent to which the administration cuts investments in infrastructure and eliminates the leasing tax credit under section 45W of the Inflation Reduction Act (IRA).
“However, the Trump administration could potentially incentivise US assembly of Chinese EVs or battery production,” Schuster added.
The pro-internal combustion engine (ICE) agenda is likely to slow the emissions reductions regulation in the country, which could cause some EV programmes to be delayed or cancelled, he said.
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