The 47th President of the United States, Donald Trump on his inauguration day issued Presidential Orders  that include “unleashing American energy.” This order includes Sec.2 (e) rejecting the “electric vehicle mandate” within the United States:

“to eliminate the “electric vehicle (EV) mandate” and promote true consumer choice, which is essential for economic growth and innovation, by removing regulatory barriers to motor vehicle access; by ensuring a level regulatory playing field for consumer choice in vehicles; by terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favuor (sic) EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable;”

This disregards the climate conscious ambitions of the Biden Administration and it rejects the targeted controls that promoted the purchase of EV’s. The rationale of Sec.2(e) further suggests that the drive towards moving away from traditional combustion engines through various macroeconomic measures including the EV tax credit under the Inflation Reduction Act of 2022 and clean vehicle credits, were unbalanced and coercive.

In addition to Sec. 2, Sec.4 (a) revoked and abolished a range of offices including Executive Order 14037 of August 5, 2021 (Strengthening American Leadership in Clean Cars and Trucks).  This portfolio championed the objective of “50 percent of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.”  The apparent reason behind this raft of changes is said to be ”national interest” and a “departure from burdensome and ideologically motivated regulation”. 

Global efforts to transition to EVs are gaining momentum and EV production and support infrastructure is growing in many countries, including those in Africa. This is evident in the recent efforts to develop policies to attract more investment in EV manufacturing, batteries and components, charging infrastructure, and consumer uptake of EVs.  Currently, only three of the top 20 EV manufacturers are based in the USA, while ten are in China.  As such, the policy reversal in the USA steps back, but we anticipate that, by virtue of the USA being a policy trend maker, its recent policy reversals will influence EV policy retardation by opportunistic countries that were reluctantly considering national EV policies.

In the short to medium term, the US shift away from the EV mandate will likely reduce global demand in minerals that are critical to the production of EV components. This may in turn directly impact on African commodity-exporting economies through a reduction in volumes and prices.  However, in our view, the US’ policy reversal presents a unique opportunity to attract spurned EV technology companies in America to emerging economies in Africa.  Combining leading global technology with the ready access to critical minerals in the EV value chain, can be supplemented by accelerated incentives to global EV manufacturers to set up their manufacturing industries locally and by measures to stimulate EV demand in local markets. 

Due to technological and investment constraints for developing countries, especially in research and development, there has been a limited opportunity for them to play a meaningful role in the EV transition other than in the downstream market.  The policy reversal by the USA has opened a window for emerging economies to seek deeper partnerships with disruptive American EV technology companies through targeted incentive structures coupled with a holistic policy framework that promotes the EV transition, including mineral beneficiation, EV manufacturing rebates, and incentives to stimulate EV demand in the consumer market.

The key takeaway from this analysis is:

• The Trump Administration’s policy shift away from EV mandates undermines the USA’s long-term climate goals and global leadership in clean technology. 
• This policy reversal will likely have a negative impact on the market for Africa’s raw materials which are key inputs into EV production  
• In global economic terms, China is likely going to be the biggest winner, and it will further cement its domination of the global EV market.  
• There is an opportunity for African countries to enhance their position in the global EV market by implementing policies to attract disruptive EV technology companies. 
• Taking advantage of this opportunity will entail enhancing the local power grid to support widespread EV adoption, granting rebates and other incentives for mineral beneficiation, research and development, EV manufacturing, and stimulating the demand for EVs in local markets.

Such initiatives, implemented collectively by African states, could propel Africa to a leading role in the global EV transition. 

Written by Kudakwashe Bandama, Policy Analyst, Takuva Attorneys