Future of Detroit 3 for EVs could hinge on 2024 presidential election, analysts say

As Democrats scramble to name the new ticket to take on former President Donald Trump in November's election, automotive analysts on Wall Street say the Detroit automakers' future for electric vehicles could hang in the balance in this election.

On Sunday President Joe Biden gave in to calls from Democrats to step out of the race. The Detroit Three automakers each told the Detroit Free Press they did not have comments on the news at this time. But industry watchdogs are confident the entire auto industry is carefully watching what happens next.

Vice President Kamala Harris has emerged as a front-runner to lead the 2024 Democratic presidential ticket. Harris has said she will work to earn a nomination, and within the last 24 hours she has raised $50 million in support. She has won the endorsement of a number of key Democrats, including governors in important swing states, such as Michigan's Gretchen Whitmer .

If Harris is at the top of the ticket and wins, it won't impact carmakers much because her policies likely would mimic those of Biden's, who strongly supported EVs and building out the charging infrastructure to encourage EV adoption. Harris' choice of a running mate could help swing the election in the Democrats' favor, keeping the EV transition on track, experts said.

More: Biden exit prompts questions about UAW's support for Harris

But if Harris still can't defeat Trump, that would likely put the brakes on a near-term EV transition — potentially allowing the Chinese to get an advantage in the EV race, the experts said. An exclusive new Free Press poll of likely Michigan voters, published Sunday, just hours before Biden stepped down from the ticket, showed Trump with a 7 percentage point lead over Biden.

"The presidential race is front and center for every EV investor in the world because Trump is anti-EV, which is negative for Detroit, General Motors, Ford and Stellantis,” Dan Ives, managing director and senior equity analyst at WedBush Securities told the Free Press on Monday. "From an EV perspective, a lot is riding on this. If Trump gets in, it will be a gut punch to the auto industry, which has bet a big future on EVs."

'A consistent, known set of regulations'

GM, Ford and Stellantis are all moving toward an all-electric future and have invested billions to retool or build factories to make EVs and, in some cases, their batteries. GM has said, for example, it aims to sell only all-electric cars by 2030.

The Biden administration has helped the automakers in their efforts by allowing for $7,500 consumer federal tax credits on qualifying EV purchases. It has earmarked $7.5 billion to build out the EV charging infrastructure across the nation. In 2021, Biden visited GM's Factory Zero in Detroit and Hamtramck in support of its building the GMC Hummer EVs. The Biden administration has also been a strong supporter of the UAW, which had endorsed him, as he took to the picket line in Michigan last fall during a targeted strike against the Detroit automakers.

A Harris presidency could be tougher on oil and climate change going forward, which would push carmakers more quickly into EVs. That push could be detrimental, given the automakers are still losing money on the vehicles and fewer manufacturing workers per car are needed, said Erik Gordon, a professor at the Ross School of Business at the University of Michigan.

"While the industry may not be thrilled about the emissions policies of the Biden-Harris administration, at least it’s a consistent, known set of regulations that they can plan for and work toward," added Sam Abuelsamid, principal analyst Transportation & Mobility at Guidehouse Insights in Detroit.

What a Trump presidency looks like

Trump also visited Detroit last fall , speaking to workers at a nonunion shop, Drake Enterprises in Macomb County. He criticized Biden's efforts to push an EV transition, saying it would kill the U.S. auto industry and jobs.

Some analysts said Trump would likely be tough on direct and indirect imports from China that could swamp the U.S. EV market. Keeping the Chinese, which make quality and cheap EVs, out of the U.S. market would help Detroit automakers develop more affordable EVs and increase adoption. Biden has imposed 100% tariffs on the import of Chinese EVs to head that off.

But Abuelsamid said the only thing certain in a Trump administration is "chaotic times ahead."

"If I was in top management at any automaker and supplier, I would be extremely wary of another Trump administration," Abuelsamid said. "In any large, capital-intensive business with long lead times, the only thing worse than too much regulation is uncertainty and continual changes in policy."

If Trump is elected, he could cancel policies to promote EV infrastructure that would make long-term planning difficult for carmakers.

"There is also a strong possibility that if Trump tries to implement Project 2025-style policies, significant numbers of people that the industry wants working here may decide that it’s better live somewhere other than the U.S. and recruiting will become much more difficult," Abuelsamid said. "The North American auto industry should also be wary of Trump’s comments about welcoming Chinese automakers to build vehicles in the U.S. That would likely be devastating to GM, Ford and Stellantis."

Not 'the end of the world'

For the auto industry, Morningstar Auto Analyst Dave Whiston said Monday that whoever the Democrats nominate, it won't likely lead to radical policy changes that would impact the auto sector. But if Trump wins, there’s a higher likelihood of removal of some policies that encourage EV sales.

"But that isn’t the end of the world for legacy firms that are losing billions selling them anyway," Whiston adds. "Law changes would just slow the transition."

GM, Ford and Stellantis are considered legacy automakers, meaning they largely make gasoline-powered vehicles. GM has said it expects its EVs to be "variable profit positive" later this year. Variable profit is when the revenue GM earns from selling the vehicle exceeds the direct cost of producing it. The calculation excludes corporate or “fixed” costs.

Whitmer and the UAW

Gordon said Whitmer's endorsement of Harris is less important to the Democrats than UAW President Shawn Fain's endorsement, and "he will endorse any candidate who is not Donald Trump."

Indeed, the UAW issued a statement Sunday afternoon noting: "Vice President Kamala Harris walked the picket line with us in 2019, and along with President Biden has brought work and jobs back to communities like Lordstown, Ohio, and Belvidere, Illinois." It said Trump did nothing to help the union workers or the auto industry.

But during all of this, Whitmer sat silent as governors from key states, such as California's Gavin Newsom and Pennsylvania's Josh Shapiro, endorsed Harris. Gordon said the slight delay in Whitmer's endorsement, given the importance of autos to Michigan, signaled hesitancy.

"Gov. Whitmer would have been better off being the first governor to support Harris," Gordon said. "She gained nothing by delaying her endorsement. You show loyalty by immediately announcing your wholehearted support, not by hesitating to think about it."

A running mate

The key to the auto industry's future could be in a running mate. The key battleground states are Pennsylvania, Michigan, Georgia, Wisconsin, Nevada and Arizona.

Wayne State University business professor Marick Masters closely monitors politics and labor. He said a Harris nomination “moves the needle positively somewhat in favor of the Democrats but not that much to make that much of a material difference between now and Election Day.”

The Democrats must roll out her nomination well at their convention next month, Masters said, with the focus on her vice presidential selection.

“Generally, that choice doesn’t make much of a difference, but it could in this race based on particular states, given there are prospective nominees in battleground states,” such as Shapiro and Whitmer, Masters said.

WedBush Security's Ives said Wall Street is watching Whitmer and Shapiro.

"A Harris-Shaprio ticket would be the most bullish for the EV industry," Ives said. "Newsom is the wild card, and Whitmer, many view that as more of a 2028. ... You’ve seen stocks up today because now at least this is not a Trump runaway win. There’s a race. And the stocks are pricing that."

Masters said it will be important to see how the Democrats roll out Harris, if she is to be the nominee, and how she presents herself next month at the Democratic National Convention.

“If she presents herself better and she gets a positive rollout at the convention, she has a stronger chance of winning than Biden did," Masters said. But he warned, "Automakers will have to consider the possibility of a Trump administration in their forecast. I am not certain where the electrical transition will be on (Trump’s) list of priorities, but I think it will be high.”

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Contact Jamie L. LaReau: jlareau@freepress.com . Follow her on Twitter @ jlareauan . Read more on General Motors and sign up for our autos newsletter . Become a subscriber .

This article originally appeared on Detroit Free Press: Future of Detroit 3 for EVs could hinge on 2024 presidential election, analysts say