Donald Trump's plans threaten the EV transition

An abrupt change of course on US subsidies would come at a time when demand is already slowing in developed economies.

- June Yoon

Electric car sales have picked back up in recent months, with global sales running a third higher in October than the previous year.

In many countries, much of that growth is still being driven by government subsidies. The US is one of them, although that support may not last much longer.

President-elect Donald Trump is expected to kill the US$7,500 (S$10,100) consumer tax credit for electric vehicle (EV) purchases as part of broader tax-reform legislation. Asian and European carmakers have been particular beneficiaries of this lucrative offer. They have most to lose.

The US and China are the world's two largest national markets for EVs. But the latter is dominated by domestic brands, which account for more than 92 per cent of the total, leaving little room for global automakers.

The US$95 billion US market, by contrast, is an open one.

Since the start of 2023, tax credits have been a key driver of US EV sales. Incentives accounted for more than 12 per cent of the average transaction price, compared with the industry-wide average of about 7 per cent, according to Cox Automotive.

This helped to push the EV market share of total US car sales up to 9 per cent in the latest quarter, the highest on record.