US Election Looms: Potential Impact on Europe’s Green Tech and Electric Vehicle Market

European Green Tech Investors Concerned About Impact of US Import Taxes
As the US presidential election approaches, European investors in the green tech sector are bracing for potential challenges to the growing electric vehicle (EV) and hybrid car market. A key concern is Donald Trump’s proposal to introduce a 10% import tax on all foreign-made goods and a 100% tax on imported vehicles if he wins the election. The plan could significantly disrupt European exports to the US, which have seen rapid growth in recent years.

The US market has become increasingly important for European EV manufacturers. In 2023, exports of European hybrid and electric vehicles to the US soared from just 2% in 2017 to 26%, now valued at almost €7 billion. Investors are worried that such an import tax, combined with rising competition from Chinese products, could undermine the expansion of Europe’s green car market, especially given the subsidies provided by the US government under the Inflation Reduction Act (IRA).

Inflation Reduction Act: A Game-Changer for US Electric Vehicle Market
The Inflation Reduction Act, signed by President Joe Biden in 2022, has been a game-changer for the US electric vehicle sector. The $220 billion (€202 billion) invested in clean energy has boosted sales of US-made electric vehicles by 55% in a single year. The law offers substantial tax credits: up to $7,500 (€6,877) for new EV buyers and up to $4,000 (€3,668) for used EVs.

This support has made US-made electric vehicles more competitive, but the market is still in its infancy. While the IRA has significantly advanced the green transition, experts agree that the US EV market will take years to stabilize. Lew Fulton, director of energy futures at the University of California Davis, emphasizes that it will take at least until 2030 to fully support EV purchases and establish a stable system. A reduction in US support for electric vehicles would significantly hamper the growth of the market and disrupt the industry.

Potential Shifts in Investment: Some European Green Tech Companies Eyeing US Expansion
In response to the potential policy changes, some European investors are already planning to shift their focus to the US market. Italian entrepreneur Elyn Flyger, founder of Pinpoint, a company using AI to optimize energy consumption, has expressed concerns about the election’s outcome but remains optimistic. “The ball is kind of rolling,” she says, “and no administration can stop this.” This reflects a growing sentiment among European investors that the green tech transition is unstoppable, despite potential political setbacks.

If Trump’s import taxes come to fruition, they would add another layer of complexity for European manufacturers and investors.

Currently, imported EVs make up about 30% of the US electric vehicle market, meaning European-made vehicles could face a sharp increase in costs, further weakening their competitive position compared to US-made vehicles, which benefit from extensive subsidies under the IRA.

Looking Ahead: The Future of Green Tech in a Divided US Market
With the election outcome uncertain, the future of Europe’s green tech sector, particularly in relation to the US market, is at a crossroads. Continued support for the IRA and the green transition by Biden or his successor could create a more favorable environment for US-made EVs but may result in higher costs for European imports. On the other hand, the potential rollback of the IRA under a Trump administration would alter the trajectory of the EV market, possibly reducing demand for European-made vehicles and slowing the transition to clean energy.