The S&P Global Mobility AutoIntelligence service
provides daily analysis of global automotive news and events. We
deliver timely context and impactful analysis for navigating the
fast-moving industry. Behind the Headlines offers a bi-weekly dive
into recent top stories.
On Jan 20, 2025, President Donald Trump took office and began
his second term. While more change is expected to come, and at a
rapid clip, President Trump's inaugural speech and first executive
orders affecting the US and North American auto industry do not
vary widely from our earlier expectations. At a broad level, these
issues will directly affect the US auto industry:
- The perception of an existential threat from mainland Chinese
automakers and technology companies; - Positions on environmental policy, particularly as relates to
vehicle emissions, infrastructure spending and safety
regulations; - Trade policy as it relates to both USMCA and potential for
national security tariffs
President Trump has announced the priorities for his agenda,
with most elements echoing issues defined on the campaign trail.
Specifically, the America First Priorities, as the Trump
Administration calls a series of policy changes, will directly
impact the auto industry.
However, it should be noted that much of the detail is still
outstanding and uncertain. S&P Global Mobility still advises
that a scenario mindset remains critical for decision-making.
Decisions need to consider business and market demand issues in the
context of upper and lower bounds derived from plausible scenarios,
along with a baseline forecast.
America First Priorities
President Trump's America First priorities are batched into four
areas:
- Make America Safe Again
- Make America Affordable and Energy Dominant Again
- Drain the Swamp, a reference to moving toward a leaner
government with less waste - Bring Back American Values
Many of the initiatives do not directly affect the automotive
industry, though a handful certainly do. The Make America Safe
Again priorities affect immigration and law-enforcement issues.
Under Make America Affordable and Energy Dominant Again are the
Trump Administration policies most likely to affect the auto
industry.
In this area, the President aims to reverse previous President
Joe Biden's efforts to control or reduce drilling for oil as well
as other efforts affecting energy production. Among the priorities
are that “President Trump's energy actions empower consumer choice
in vehicles, showerheads, toilets, washing machines, lightbulbs and
dishwashers.”
That policy point supports easing vehicle emissions and fuel
economy regulations. Though largely aimed at drilling and other
energy issues, under this section a key priority is to end “Biden's
policies of climate extremism.”
While stated in the context of regulations around energy
production and use, it will also affect policies impacting the auto
industry. The incoming President has already issued the executive
order to withdraw the US from the Paris Climate Accord. Withdrawing
from the Paris Climate Accord will change what environmental
targets the US sets for itself and will end its participation in a
treaty which looks to reduce global warming.
Issues under the Make America Affordable category which will
have an impact on the US auto industry, among other industries,
include an “America First Trade Policy.” The White House says
“America will no longer be beholden to foreign organizations for
national tax policy, which punishes American business.”
During his inauguration speech, President Trump said he will
create an External Revenue Service “to collect all tariffs, duties
and revenues. It will be massive amounts of money pouring into our
Treasury coming from foreign sources.”
At time of writing, the logistics and details of the new trade
policies are not clear, but tariffs will be part of the process. As
we have noted previously, those will increase the cost of goods and
of manufacturing within the US and will impact global sourcing
strategies.
Under the “Drain the Swamp” priorities, President Trump aims to
reform and improve government bureaucracy and promises to “pause
burdensome and radical regulation not yet in effect that Biden
announced.”
President Trump also signed an executive order freezing all
legislation not yet published in the Federal Register, pending his
administration's review, fulfilling the promise in the speech to
block items which the Biden Administration was pursuing. Further,
reducing regulations and bureaucracy could impact the agencies
which oversee regulations the US auto industry works under.
S&P Global Mobility expectations
Many of the assumptions we held prior to President Trump taking
office hold were evidenced in the inauguration speech and executive
orders signed on January 20, 2025. A dominant trait of the new
White House Administration will be speed, and pressure to rethink
how things are done to make sure change happens faster.
The Administration will challenge old norms and assumptions.
Under President Trump's first term, he pushed for legislative and
executive order changes to happen more quickly and made decisions
more quickly than most previous presidents. That trait will be
accentuated with the second term.
Executive branch agencies will be pushed to speed processes and
reach conclusions faster, to be more efficient and reduce
bureaucracy. For the auto industry, the Environmental Protection
Agency (EPA) and National Highway Traffic Safety Administration
(NHTSA) may develop rule-making proposals much more quickly.
There are some legally defined provisions for getting public
feedback which may not be able to be shortened, but the agencies
can be pushed to develop analysis and proposals faster. And it
should not be presumed that it is impossible to change some of the
procedural requirements.
Federal emissions and fuel economy regulations
Though the speed of change demanded by this Administration may
challenge current procedural requirements for some developing and
implementing laws and processes, there are also required review
periods which may not change. As we noted in earlier reports, we do
not expect that the rule that emissions and fuel economy
requirements must be finalized 18 months prior to the model year
start will change.
As of January 2025, NHTSA corporate average fuel economy
standards could be frozen at 2027 model-year levels, rather than a
change being issued to lower 2028 model year regulations. We would
expect the EPA to adjust emission standards for 2027 model year to
a lower level, mirroring NHTSA guidelines.
Current EPA greenhouse gas (GHG) emissions and NHTSA fuel
economy regulations for light vehicles run through 2032; these are
separate sets of regulations. These regulations are not aligned,
making it difficult for automakers to meet both standards. If the
gap between the GHG and NHTSA standards were closed, then the
federal regulations would not align with California.
For the medium- and heavy-duty commercial vehicle sector (MHCV),
the EPA has mandated GHG emission standards (Phase 3) starting in
2027 model year, going through 2032 model year. MHCVs are not
subject to fuel economy regulations under NHTSA.
S&P Global Mobility's latest assumptions are that automakers
will not physically be able to comply with the later years of the
federal regulations as written today. Change is necessary to
realistically align regulations with what is technologically
feasible, with what consumer demand is for electrification
technology, and with what is profitable at a price point consumers
are willing to pay, and to accomplish those factors within the
defined timeframe.
As President Trump has taken office, the shape of his
administration's changes is not yet known. Other potential outcomes
include seeing regulations for 2028 through 2032 model years are
lowered instead of seeing the 2027 model year regulations frozen.
In that case, regulations for post-2032 model year would be less
onerous both because of the administration's view and because the
2033 model year would be starting from a less difficult base than
if the current regulations were held.
We also see potential for the MCHV GHG Phase 3 regulations to be
redrafted; that process could take 24 to 36 months, which would
effectively eliminate the 2027 implementation of GHG Phase 3 while
new rules are drafted, with current GHG Phase 2 rules staying in
place.
Inflation Reduction Act and Bipartisan Infrastructure Law
funding future
The Inflation Reduction Act (IRA) has been codified since 2022
and requires Congressional action to substantively change. The IRA
includes both consumer-level incentives as well as manufacturing
incentives designed to ensure a more robust North American supply
chain. The IRA also has significant funding available for
purchasing, installing, operating and maintaining Class 6-7 ZEV
trucks as well as funding for purchasing or installing ZEV port
equipment or technology, including ZEV trucks themselves.
The Bipartisan Infrastructure Law is a much broader act;
relative to the auto industry and electric vehicle adoption, the
President has signaled intent to eliminate funding for electric
charging infrastructure.
As the Republican party has control of both chambers, making
changes could happen more easily. These laws do require
Congressional action to change. However, reducing manufacturing
funding is likely to reduce investment. Approximately 84% of the
jobs supported by IRA funding (about 135,000) are in Republican
states.
S&P Global Mobility estimates those direct jobs have a
multiplier effect of 5 to 10 jobs for each of the direct jobs. As a
result, Republican Senators and representatives of Congress from
districts where this investment is being made may philosophically
agree with reducing funding, yet also have a responsibility to
their constituents to support the local economy. Their support for
reducing funding cannot be assumed.
Against this backdrop, we have focused our assumptions. We
expect the retail consumer lease credit for EVs available under the
IRA will be eliminated. The critical raw materials and local
components manufacturing credits are likely to be maintained, to
help reduce the use of foreign raw materials and components. Given
the impact on Republican states of manufacturing investment, we
expect the advanced vehicle manufacturing credits available under
the IRA will be maintained.
California: Waiver expected to be revoked within first 100
days
The 1967 Clean Air Act allows California Air Resources Board a
waiver to set their own GHG emissions standards, and Section 177
allows for other states to choose to adopt California's standards
or the US federal standards. California's Advanced Clean Cars I
program saw its waiver revoked during President Trump's first
presidency and reinstated under President Biden.
However, the Advanced Clean Cars II program, which goes to 2035
and requires 100% zero-emissions light vehicle sales, has not been
granted an EPA waiver. The first ACC is still more aggressive than
federal standards, and this waiver is expected to be revoked. Under
President Trump, there is nearly no potential for the ACC II
program to be granted a waiver.
Another wrinkle in the California situation is that several
automakers signed a Framework Agreement in which they agreed to
follow California's ACC I standards. That contract remains
enforceable, to our understanding. Among the automakers who have
signed are BMW, Ford, Honda, Volkswagen and Stellantis.
Simultaneously, legal challenges to ending the California
exemption are being prepared. Ultimately, when the waiver is
revoked, legal challenges will be filed. These legal challenges may
need to be resolved by the Supreme Court.
California's waiver has a massive impact. As we noted earlier,
the EPA and NHTSA regulations are not aligned. If they are revised
and aligned as expected, and frozen at 2027 model year, the
emissions requirements would be out of alignment with California
under ACC I or ACC II.
California's Advanced Clean Car Act II mandates 100% light-duty
ZEV by 2035. Given that we do not expect industry to be capable of
meeting the federal regulations at this time, the more aggressive
California standards may need to be delayed by the state of
California as well. Revoking the waiver could close the matter.
Global tariffs and the 2026 USMCA Review
On day one, the President did not issue new tariffs, though is
directing federal agencies to evaluate US trade relations with
China, Canada and Mexico. The fallout from tariffs is expected to
prove damaging to US economic activity.
The December 2024 S&P Global Mobility light-vehicle
forecasts assume the implementation of a 10% universal tariff along
with a 30% tariff on imports from mainland China. This would give
rise to a period of elevated inflation, to which the Federal
Reserve is forecast to respond by pausing its easing cycle in
mid-2025. However, this is one of the most fluid elements of the
administration's policies and forecasts will be adjusted as more
information is available.
The President floated possibility for imposing the 25% tariff
mentioned during the campaign as soon as Feb 1, 2025. The president
was quoted as saying, relative to Canada and Mexico, “We are
thinking in terms of 25% on Mexico and Canada, because they are
allowing vast numbers of people” into the US and said that it could
be imposed on February 1. The agencies are being directed to
investigate and remedy persistent trade deficits and address unfair
trade currency policies by other nations, according to a Wall
Street Journal report.
The USMCA free trade agreement between the US, Mexico and Canada
includes a required review scheduled for July 2026. President
Trump's comments on Day One echo that the potential 25% tariff on
Canada and Mexico are intended as a measure to pressure both
countries to better deal with illegal immigration to the US.
While President Trump's Jan 20, 2025, comments suggest this
tariff could happen sooner, our thinking has been that we will see
no changes until the 2026 renegotiation of the USMCA. While we have
expected that those threatened tariffs would not occur prior to the
review, the Jan 20 comments reflect the potential fast pace of
activity expected from this President, and our assumptions may need
to be reviewed.
In addition, a tariff against the US neighbors and long-standing
trading partners might be a nuanced tool rather than a
sledgehammer, with specific industries targeted and exemptions for
others. At this time, we do not know the details on what this
tariff will look like, however. A tariff on Mexico and Canada could
revise our expectations for a 10% universal tariff as well.
Relative to trade and tariffs outside of USMCA, S&P Global
Mobility has put in place an assumption that there will be a 10%
increase on all imports from Europe, Japan and any other country
than mainland China or Canada and Mexico with the December 2024
forecast. We also expect a 30% tariff on imports from mainland
China. We see these tariffs starting from the second quarter and
ramping up over the subsequent four quarters. We do expect other
countries to respond with retaliatory tariffs, though have not
provided specifics how those will develop.
One of Biden's last acts was to implement a rule banning the
sale of vehicles in the US which have software and or hardware
related to vehicle connectivity and levels of autonomous vehicle
driving systems; that ban effectively halts the sale of any vehicle
produced in mainland China, by any automaker. This ban does not
take effect until 2027 model year for software and 2030 model year
for hardware, yet still has significant impact.
The rule also bans these technologies if developed in China or
Russia regardless of where they are produced, which effectively
bans mainland China brands from building in Mexico and shipping to
the US under USMCA. At time of writing, it is uncertain what the
Trump Administration's reaction will be. On its face, the ban does
support the America first and national security issues which Trump
has said are a priority for his administration.
President Donald Trump is in office: Assumptions affecting
total industry volume (TIV)
S&P Global Mobility continues to update the forecast against
these changing conditions. As of January 2025, we see that these
series of changes could result in the EV share of US light-vehicle
sales reaching about 25% in 2030, which is lower than the 30% we
had forecast with our December 2024 forecast.
The relaxed NHTSA corporate average fuel economy targets are
expected to result in increased demand for internal combustion
engine products, as well as potential for production planning to
adjust on country of origin, resulting from tariffs. We expect that
the consumer interest in ICE products will be boosted by relative
lower prices, while automakers will extend lifecycles with changes
to regulations.
Along with the increased demand for ICE products, we expect EV
demand will be impacted by the reduction in government incentives
to consumers. Demand for plug-in hybrid electric vehicles (PHEVs)
is likely to decline as well, depending on the final form of IRA
incentives and automaker production plans. Hybrid electric vehicles
(HEVs) will see increased share, depending on gas prices and the
changes to regulatory policy.
As previously noted, we do expect tariffs to have an adverse
impact on our future total industry volume (TIV) assumptions.
Whether the tariffs are protective or punitive, or a mix, these
will have an adverse effect on TIV. They will increase costs to
customers, perhaps partially offsetting the vehicle affordability
gains that a lower EV mix may enable. We also expect that tariffs
will increase labor rates. Tariffs will increase US or North
American sourcing, which comes along with higher labor rates.
Another key issue for our TIV assumptions, and another wildcard,
involves how the situation around immigration resolves. President
Trump signed executive orders affecting handling of immigrants and
immigration processes on day one. These stricter immigration
controls and potential for mass deportations can work as a
disadvantage to TIV. Fewer immigrants reduces the pool of customers
and buying power of consumers in the US.
A path forward becomes more clear
While consumer uncertainty and resistance to change relative to
full electrification remains, activity under President Trump, as
expected, paint a clear expectation for US policy direction in the
immediate term. In our earlier reporting, we noted that automakers
and suppliers have been delaying near- and long-term product
planning decisions. As policy details continue to come into focus,
even if details are outstanding, we will begin to see decisions
being made. We fully expect automakers are ready to act, and many
have a clear idea of where they will move their propulsion system
design mix.
For more analysis and support:
- Get a free trial of
AutoIntelligence Daily, our daily news service for
comprehensive industry news.
Speak with our consulting representatives for company-specific
impact analysis.- Subscribe to
AutoTechInsight, our platform that offers detailed analysis on
supply chain and technology industry developments.
Commercials Cooperation Advertisements:
(1) IT Teacher IT Freelance
立刻註冊及報名電腦補習課程吧!
电子计算机 -教育 -IT 電腦班” ( IT電腦補習 ) 提供一個方便的电子计算机 教育平台, 為大家配對信息技术, 電腦 老師, IT freelance 和 programming expert. 讓大家方便地就能找到合適的電腦補習, 電腦班, 家教, 私人老師.
We are a education and information platform which you can find a IT private tutorial teacher or freelance.
Also we provide different information about information technology, Computer, programming, mobile, Android, apple, game, movie, anime, animation…
(2) ITSec
www.ITSeceu.uk
Secure Your Computers from Cyber Threats and mitigate risks with professional services to defend Hackers.
ITSec provide IT Security and Compliance Services, including IT Compliance Services, Risk Assessment, IT Audit, Security Assessment and Audit, ISO 27001 Consulting and Certification, GDPR Compliance Services, Privacy Impact Assessment (PIA), Penetration test, Ethical Hacking, Vulnerabilities scan, IT Consulting, Data Privacy Consulting, Data Protection Services, Information Security Consulting, Cyber Security Consulting, Network Security Audit, Security Awareness Training.
Contact us right away.
Email (Prefer using email to contact us):
SalesExecutive@ITSec.vip