The US auto sector is still finding its footing after a pandemic-era boom.
The incoming Trump administration may add to this uncertainty.
Major US automakers like GM (GM) and Ford (F) spent 2024 curtailing their EV growth plans as the projected demand for EVs waned.
And Trump, even with his close ties to Tesla (TSLA) CEO Elon Musk, appears to be measured at best in his support for a continued push to electrify America's auto fleet.
"I'm all for electric cars, but you have to have all of the alternatives also," Trump said in an interview with CNBC last year. "First of all they don't go far, they cost too much, and they're all going to be made in China."
"You can't just go to electric," Trump added, claiming the grid isn't up to the challenges of production and distribution.
At a campaign stop this summer, however, Trump said he had "no choice" but to back EVs after gaining Elon's support.
Still, it appears Trump will indeed try to roll back President Biden's requirements that automakers meet tough emissions targets (which would have benefited EVs), as well as the $7,500 federal EV tax credit.
Despite Tesla having benefited greatly from these credits for years, Musk said in the fall he supports rolling back this program.
"[Removal of the tax credit] would be devastating for our competitors and for Tesla slightly, but long term probably actually helps," Musk said during the company's second quarter earnings call.
Legacy automakers like Ford and GM are more dependent on the tax credit than Tesla to bring their retail prices down, without hurting margins.
"[EVs] are a rapidly growing market and relatively new technology, but [loss of the EV tax credit] is not trivial. I mean, $7,500 is not trivial," Joseph Shapiro, UC Berkeley associate professor of economics, said to Yahoo Finance.
In addition, automakers curtailing EV development to succumb to Trump's whims may suffer in the long run.
"If the automakers are distracted from the EV transition, they risk falling behind in the technology and losing out long-term as global automakers move on to the next generation of motor and battery advancements," said Sam Fiorani of AutoForecasting Solutions.
A pandemic-era boom in sales in 2020-21 has also left some automakers struggling to manage their inventory levels, while high interest rates and soaring sticker prices have also pressured dealers.
Stellantis, which manufactures the Jeep, Dodge, and Ram Trucks brands, among others, has sought to bring down its inventory levels for some time, with executives saying the company was "grinding through a transition" back in the fall. In December, its CEO quit.