EV Growth Faces Uncertainty Amid Policy Shifts and Election Dynamics: Bernstein

The Biden administration's ambitious environmental agenda has significantly boosted electric vehicle (EV) adoption in the U.S., with EV penetration rising from 2.5% in 2020 to 10% in 2024 year-to-date, as per Bernstein.  

However, as per the equity research and trading firm, recent months have seen a slowdown in EV growth, raising concerns about meeting the California Air Resources Board (CARB) and federal Environmental Protection Agency (EPA) targets. 

Bernstein analysts suggested that while a Democratic White House would likely maintain current policies, the slowdown highlights the potential need for additional support or more realistic target-setting.

They anticipated that a Democratic administration would continue to support EV growth with existing policies. Yet, with current trends, the firm notes, “more support may be needed or more realistic target setting may be required.” Without action, established automakers could face increased penalties for non-compliance.

Conversely, Bernstein foresees a Republican administration actively seeking to reverse the Biden administration’s EV policies. Both the Republican National Committee (RNC) platform and Project 2025 indicate intentions to dismantle “harmful regulations” and cancel existing EV mandates. 

However, such reversals would require majorities in both the House and Senate and face potential legal challenges. Changes to EPA policy, particularly concerning 2027 emission targets, could still impact the EV landscape significantly.

In light of this policy uncertainty, Bernstein identified three key priorities for original equipment manufacturers (OEMs). First, automakers should shift their lobbying efforts to emphasize technological leadership, re-shoring, and cost reductions of EVs, rather than solely focusing on environmental credentials. 

Second, increasing flexibility in technology and manufacturing plans will be crucial. Automakers with adaptable platforms, like Stellantis (NYSE:STLA), are better positioned to navigate these changes. Third, making EVs more affordable is essential, requiring rapid innovation and scaling.

Among the major automakers, Bernstein sees Stellantis as the most adaptable to either potential outcome of the U.S. election. “Stellantis’s flexible platform approach enables it to shift between battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) and adapt to various growth scenarios,” Bernstein noted. The company’s global footprint also helps mitigate potential adverse impacts from the U.S. market.

For General Motors (NYSE: NYSE:GM), Bernstein sees a favorable outlook under a Democratic administration due to its ambitious BEV strategy. 

“GM’s Ultium platform and planned BEV launches would benefit significantly from continued policy support,” the firm stated. Conversely, Ford’s (NYSE: F) positioning might be stronger in a Republican scenario, given the need to adjust its BEV strategy and pivot to more PHEVs while meeting EPA and CARB targets.