Cars are parked in a dealership space on the first day dealerships are allowed to open to the public on May 20, 2020 in Linden, New Jersey.
Spencer Platt | Getty Images
Tuesday’s result Presidential election between president Donald Trump and former Vice President Joe Biden is expected to have far-reaching implications for the US auto industry – from short-term consumer confidence to long-term regulatory and trade policies.
In his first term as Commander in Chief, Trump deregulated, renegotiated and litigated critical areas that affect the auto industry. If the Republican president is re-elected, much of it is expected in his second term. These include lower corporate tax rates, US-centric trade, and reduced environmental regulations.
If Biden, a Democrat, is elected, expect him to reintroduce, if not increase, environmental regulations from the time he takes office as Vice President under the Obama administration. Much of Biden’s campaign was centered in support of US environmental policies, including support for the Electric vehicle growth – a growing focus of the US auto industry.
John Murphy, an analyst at BofA Securities, summed up a second term for Trump as “more equal, both positive and negative”, while a Biden presidency would mean “more stability / predictability but stricter guidelines”.
“Similar to the election developments in 2016, there is a significant risk that the results of the upcoming presidential and congressional elections on November 3 will have a material impact on the US and global auto industries,” Murphy wrote in a statement to the Monday Investors.
If the White House and Congress are democratic, BofA Securities expects an initial “negative reaction to auto stocks given politically more difficult fundamentals,” which could be offset by a broader stimulus plan and a more stable regulatory environment.
In the event of a Republican sweep, BofA Securities expects an “initially positive response to auto stocks as the fundamentals remain relatively favorable from a political perspective. However, in this scenario, policy uncertainty and volatility would undoubtedly increase as Trump may move forward.” encourages to take more aggressive action that we don’t expect to be support for stocks in the medium term. “
So which candidate would be better for the US auto industry? It depends on both the problem and the automaker.
The biggest differences between the candidates in which the US auto industry is involved are fuel economy and emissions regulations.
Trump is against stricter regulations, citing the technologies that meet such standards to raise vehicle prices and discourage customers from buying newer, safer vehicles.
The Trump administration earlier this year completed a rollback the US vehicle emissions standards passed by the Obama administration. Trump also withdrew California’s waiver to set its own stricter standards, resulting in a lawsuit.
Trump and Biden supporters
“Trump sees regulations as obstacles to economic growth, while Biden supports the use of regulations to achieve his broader goals, particularly the goal of combating climate change,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. said in a recently Blog entry.
Biden has committed to reintroducing and promoting such regulations. It should also allow California and other states to set their own standards, which has divided automakers.
While automakers say they don’t base their business decisions on a region’s policies or political leaders, the electric vehicle industry is at a potential turning point when it comes to electric vehicles.
The Trump administration hasn’t necessarily done anything to prevent the introduction of electric vehicles, but it hasn’t done much to push their adoption either.
Biden has pledged $ 400 billion in public investment in clean energy, including battery technologies and electric vehicles. Part of Biden’s climate plan is to provide government spending to support electric vehicles, including 500,000 new charging points for electric vehicles by the end of 2030.
It is expected that such a plan would stimulate greater adoption of electric vehicles. That would be a win for automakers like GM and Tesla that invests billions in such vehicles.
After initially proposing a budget that would have been eliminated a federal tax incentive With up to $ 7,500 to buy an electric vehicle, the Trump administration maintained the incentive.
Biden said he wanted to start one “Cash for Clunkers” Discount program that would encourage Americans to trade in their older vehicles for new electric vehicles. The current tax credit was introduced during the Obama administration.
Trump has chosen a bilateral trade approach. These included renegotiating the North American Free Trade Agreement into the United States-Mexico-Canada Agreement (USMCA) and introducing tariffs to balance trade with China and other countries.
Trump has also heavily criticized the World Trade Organization – an international government agency that regulates international trade practices. Trump called that WTO “broken” Countries like China have taken advantage of it. The US has threatened to leave the organization.
Both Trump and Biden have criticized China as a global trade violator. Trump has sought bilateral agreements with Beijing, however, while “Biden plans to take a multilateral approach to counterbalancing China’s economic power through stricter enforcement of existing trade rules and support for the WTO,” said Dziczek.
Automakers have invested billions of dollars to avoid burdensome Chinese tariffs on US imports by manufacturing vehicles in China, the world’s largest vehicle market. Tesla started local production in China late last year while older automakers like GM tried to expand operations in the country.
Many industry analysts and executives do not expect any candidate to make significant changes to the USMCA, which ultimately won the support of both parties after more than a year of negotiating to resolve democratic concerns. The agreement was also supported by the AFL-CIO, an association of 56 unions representing 12.5 million workers.
“I don’t think Biden is going to take a big step in the auto trade,” Mary Lovely, a senior fellow at the Peterson Institute, told CNBC. “There’s no way, especially with the job support Biden has, he’s going to change that.”
– CNBC’s Michael Bloom and Silvia Amaro contributed to this report.