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Date: January 23, 2025
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By Mobility Portal
World

Trump Targets EV “Shutdown” While Challenging Mexico Once Again

The U.S. president reaffirms his plan to “end the new ‘Green Deal’” and “revoke the electric vehicle mandate,” with Elon Musk applauding. What could this mean for Mexico’s automotive industry?

While consistent with his campaign rhetoric, Donald Trump’s vehement stance against electric vehicles (EVs) during his presidential inauguration speech on Monday sent shockwaves through Mexico’s electromobility sector.

Speaking before a global audience—and under the watchful eye of Elon Musk—the newly inaugurated president reaffirmed his commitment to prioritize domestic oil and gas industries.

He also declared his intention to “end the new ‘Green Deal’” and “revoke the electric vehicle mandate.”

Just hours into his presidency, Trump issued an executive order aimed at “unleashing America’s affordable and reliable energy and natural resources.”

Specifically addressing EVs, the order stated:

“…considering the elimination of unjust subsidies and other ill-conceived market distortions imposed by the government that favor EVs over other technologies, effectively mandating their purchase by individuals, private businesses, and government entities alike by making other types of vehicles unaffordable.”

The president of the United States was blunt: he does not want electric vehicles. (Telemundo Capture)

In practical terms, this move overturned a 2021 executive order signed by Joe Biden, which had aimed to ensure that half of all new vehicles sold by 2030 would be electric.

Although the 50% target was not legally binding, it had garnered support from both U.S. and foreign automakers.

Trump’s Protectionist Agenda and Mexico in the Crosshairs

Trump’s speech reaffirmed his protectionist stance on U.S. industries, including the automotive and oil sectors.

He also reignited tensions with Mexico, the United States’ largest trading partner, which sends nearly 80% of its exports north of the border.

“It’s not surprising because much of his campaign rhetoric—and his first term—was centered on championing the oil and gas sectors.

The famous ‘Drill, Baby Drill’ slogan reflects exactly what he is pushing for,” explains Leonardo Beltrán Rodríguez, a specialist in electromobility and advisor to AMIVE, in a conversation with Mobility Portal Latin America.

Beltrán adds, “The Inflation Reduction Act directed substantial resources to bolster EV adoption, many of which benefited Republican states. If Trump moves to reverse these incentives, much will depend on the reaction from those states.”

Did Elon Musk Know Trump Would Target EVs?

Social media buzzed with claims of betrayal towards Elon Musk, the Tesla CEO and one of the world’s largest EV producers.

Elon Musk became very close to Donald Trump, and today advises him.

Despite Musk’s close proximity to Trump—he serves as an informal advisor and head of a new Department of Government Efficiency—some believe his influence could soften the blow to the EV industry.

“Having someone from the industry close to the president can potentially mitigate risks or alert him to harmful policies,” says Beltrán. He emphasizes that Musk’s role could be beneficial, providing insight into potential impacts on the EV market.

Beltrán concludes:

“Trump’s statements seem more like media strategy than a direct assault on the EV industry.”

Tariff Threats on Mexican Imports

Trump also reiterated his intent to impose a 25% tariff on all imports from Mexico, where major Chinese automakers have set up operations to capitalize on proximity to the U.S.

“The Mexican auto industry heavily depends on U.S. and Canadian inputs. A targeted tariff on vehicles would also hurt American companies that rely on cross-border supply chains,” Beltrán notes.

Moreover, the US-Mexico-Canada Agreement (USMCA) requires approximately 70% regional content for a vehicle to qualify as North American-made.

“Logistical costs to export to Asia or Europe would be prohibitive,” Beltrán adds. “Diversifying markets is not a short-term solution given the interdependence between Mexico, the U.S., and Canada.”

Sheinbaum’s Response and Broader Implications

Facing Trump’s tariff threats, Mexican President Claudia Sheinbaum has responded diplomatically, asserting that “Mexico collaborates but is no one’s colony.”

Beltrán outlines the broader context: “U.S.-Mexico discussions will likely prioritize security, migration, and trade. EV tariffs seem more like a bargaining chip for Trump to achieve other goals, such as stricter immigration controls.”

He concludes: “Despite potential tariff increases, Mexico’s cost advantages in vehicle production provide a cushion that may help maintain competitiveness.”

As Trump takes office, his aggressive stance on EVs and Mexico raises questions about the future of the North American automotive industry. However, interwoven supply chains and shared economic interests may temper the impact of his policies.

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