The past few years have seen EVs skyrocket in popularity and President Joe Biden has accelerated this by recognizing their importance within the clean energy transition. His administration has invested significantly in domestic EV production and infrastructure development. But politicians on the other side of the aisle are taking a different stance, attempting to paint EVs as dangerous to the automotive market – and the broader U.S. economy.
While Donald Trump remains the primary Republican challenger to Biden ahead of the 2024 presidential election, he faces rising competition from a growing pool of rivals including Florida Gov. Ron DeSantis and biotech entrepreneur Vivek Ramaswamy. Each represents slightly different factions of the party, but they share some policy ideals in common. One that has recently become clear is their stance against electric vehicles. This may cause investors to wonder about EV stocks while the election draws closer
It’s understandable that this may lead to some questions regarding the growth potential of EV stocks, particularly as broader macroeconomic trends continue to generate more uncertainty. But that doesn’t mean investors should be concerned.
EV Stocks and EV Criticisms
Trump’s criticisms of EVs have come to light recently as the United Auto Workers (UAW) strike has kept the auto industry in the spotlight. As investors and consumers wondered about the future of some of the country’s most prominent automakers, Trump seized the opportunity to weaponize it, claiming that the transition to EVs would render jobs in the automotive manufacturing sector obsolete.
Criticizing Biden’s investments in domestic EV production and infrastructure, he stated that “By most estimates under Biden’s electric vehicle mandate, 40% of all US auto jobs will disappear — think of this — in one or two years.”
Nonpartisan Factcheck.org has debunked these claims. And Judd Legum of newsletter Popular Information described this as a clear ploy to draw support from disgruntled auto workers. But as he also notes, Trump isn’t the only politician to push this narrative. While addressing reporters at an event in Flint, Michigan, Ramaswamy described government investment in EV production as “a step in an anti-American direction” and “dangerous to the future of the country.” Ramaswamy’s campaign did not respond to a request for comment.
DeSantis has displayed a similar attitude toward EVs. As the New York Times reports, the Florida governor has promised to do away with electric vehicle subsidies and pull the U.S. out of global climate agreements if elected president. And while he isn’t part of this year’s race to the White House, Virginia Gov. Glenn Youngkin blocked Ford (NYSE:F) from building an EV battery plant in his state. The Republican cited concerns regarding China as the primary reason behind this decision.
It’s worth noting that Youngkin and DeSantis’ recent campaigns have been financed by the oil and gas industry. As such, both may have incentive to advocate for policies that don’t favor clean energy solutions such as EVs. According to the Virginia Public Access Project, Youngkin received $3,107,897 from donors in the energy and natural resources space in 2022. In the year that followed, some of Trump’s former backers in the same sector switched their focus to DeSantis. As POLITICO’s E&E News reported in December 2022:
“Energy donors including a New York metals magnate, a Dallas pipeline mogul and a Texas oil tycoon are among the wealthy contributors who backed Trump and have donated in recent years to boost DeSantis, who easily won reelection this month to a second term as governor.”
In January 2023, a Republican coalition of lawmakers in Wyoming sponsored a joint resolution on “phasing out new electric vehicle sales by 2035.” The officials called for focus to be shifted toward internal combustion engine production, citing concerns regarding EV batteries and the minerals that they require.
However, the motion did not pass. Reflecting on the bill, sponsor Ed Cooper told InvestorPlace that “the resolution was written ‘tongue in cheek’” in response to California’s ban on the sale of internal combustion engine vehicles, set to begin in 2035.
“Both bans are ludicrous and make no sense. The purpose [of the resolution] was to spark conversation and bring the topic of these types of bans forward. It accomplished that and was killed by me in the first committee meeting.”
What the Data Says
Many people in states beyond Wyoming and California seem to share Cooper’s take that outright bans aren’t a sound political strategy. Stefan Hankin, who serves as president of Lincoln Park Strategies, told InvestorPlace that while 60%-70% of surveyed Americans said they were likely to purchase an EV in the coming years, they also did not like the idea of being banned from purchasing a gas-powered vehicle. Hankin has recommended that Democrats not focus on banning gas-powered vehicles in 2024.
Hankin attributes the Republican anti-EV stance to what he calls an “authoritarian mindset.” As he sees it, politicians like Ramaswamy are employing the strategy of identifying a polarizing issue and painting it as “anti-American” in an attempt to light a fire under potential voters.
“What car you buy should not have anything to do with politics, per se,” Hankin told InvestorPlace. “But this is unfortunately the world we live in. It’s just unfortunate where we have so many problems facing the country, the globe, and we have lots of unserious people with unserious ideas trying to just say whatever it is that might get them a few more votes.”
Factcheck.org notes that it found nothing to support Trump’s claims that EVs would cause 40% of auto jobs to disappear. His remarks may have been inspired by a statement from Ford CEO Jim Farley, who said EVs require “40% less labor.” Farley also reassured laborers that job loss can be offset by Ford building its own EV components on site.
But as it turns out, EV adoption may even create more jobs and address foreign import dependency simultaneously.
Isaac Dietrich, founder and CFO of metal recycling company Greenwave Technology Solutions (NASDAQ:GWAV), notes the trend of EVs being manufactured with recycled metals that are often purchased domestically and smelted into new EV products on U.S. soil. “Each EV manufactured creates American jobs and puts money in the pockets of Americans who recycle,” Dietrich told InvestorPlace.
Alaska Energy Metals (OTCMKTS:AKEMF) CEO Gregory Beischer added that as governments and automakers have invested millions into EV production and adoption, support for electric vehicles has only grown on the global stage due to what he describes as their “irrefutable benefits.”
“General Motors is investing significant resources in vehicle manufacturing, supply chain and infrastructure in the United States to achieve our vision of an all-electric future and maintain U.S. global competitiveness,” General Motors (NYSE:GM) wrote in a statement to InvestorPlace. “In fact, we have announced more than $17 billion in electric vehicle and battery cell manufacturing (with our joint venture partners) here in the United States. Additionally we have made historic investments and signed binding agreements to secure the battery raw materials to support 1 million units of annual capacity in North America by the end of 2025.”
What Comes Next?
Does this mean that investors should be worried about EV stocks as Republican politicians double down on their attacks? Beischer doesn’t think so.
“Experienced investors who are in it for the long term are well aware of these natural fluctuations in the market, which are often prompted by political changes and differences,” Beischer told InvestorPlace. “No company is going to ride through every macroeconomic or political season without ebbs and flows.”
The importance of giving a new technology time to reach mainstream status is important. As Rob Dillan of EVhype notes, “historically, transformative industries have faced opposition before eventual mainstream acceptance.” Ironically, gas-powered vehicles encountered exactly that when automakers such as Henry Ford first introduced them. Investors who are concerned with EV stocks can take comfort in that.
This all ultimately suggests that the Republican opposition to EV adoption isn’t likely to slow the industry’s growth down in the long term. Current estimates suggest that the U.S. roads will be primarily filled with electric vehicles in 10-15 years. If that’s true, EV stocks will have plenty of room to grow, regardless of who wins in 2024 and beyond.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.