What the 2024 election means for EV makers GM, Ford, Tesla

Wolfe Research managing director and senior research analyst Emmanuel Rosner joins Market Domination hosts Julie Hyman and Josh Lipton to examine what a Trump or Harris victory in the 2024 election would mean for the auto industry, particularly for electric vehicle makers.

If Vice President Kamala Harris won the race against former President Donald Trump, Rosner makes the case for why it would have a positive effect for EV manufacturers like Tesla (TSLA) given the tax incentives provided to car buyers.

“In the case of a Trump victory, I think this is where there's a potential risk for much more disruption” in the auto industry,” the analyst indicates since potential tariffs on vehicles imported from outside the US could benefit traditional American automakers like General Motors (GM) and Ford (F). He notes that a second term for former president Donald Trump may not be as negative as previously thought since Trump is now "better friends" with Tesla CEO Elon Musk.

Rosner highlighted that his top stock picks for the industry are actually those in the peripheral auto space, including Autoliv (ALV), Aptiv (APTV), and TE Connectivity (TEL), rather than automakers themselves since the analyst remains cautious about the sector.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Naomi Buchanan.

Video transcript

Emmanuel, you know, um depending on who's ultimately in the White House, whether it's Trump or whether it's Harris, how do you try to think through as a financial analyst?

How if at all that possibly impacts your coverage universe?

Yeah, I think that there's a potential for a lot of uh impact from it.

So in the case of uh uh a Harris victory, um I think this would remain positive for the EV winners.

So es especially, uh you know, Tesla, certainly because the tax incentives on evs would remain in place $7500 you know, tax credit as well as credit for manufacturing batteries and Tesla is by far, you know, big, biggest beneficiary from this and then some of the suppliers, we cover that supply, you know, the EV side of the business such as a, for example, would benefit from that as well.

In the case of a Trump victory.

I think this is where there's a potential risk for much more disruption because I don't think he will dismantle Ira anymore.

He has spoken about it before, but now him and uh you know, Elon Musk are, you know, better friends.

I would say, and I think he said that he would probably not do it.

So at least that risk is gone.

But you could see some potential tariffs on imports of vehicles from outside of the US.

Much higher tariffs that would potentially protect the traditional automakers better from this.

So maybe be a positive for like the GM and forces of this world.

But then at the same time, if we revive some tariffs on imports from Mexico, this has the potential to be really disruptive for the automotive supply chain.

A lot of suppliers are just making uh their parts in Mexico, bringing them into the US.

And last time Trump tried to do something like this, this was a real big concern.

So I would say Harris, you know, victory probably good for the EV names.

Uh I think a Trump victory probably good for the traditional automakers, but potentially really dis for the rest of the, of the supply chain.

And then Emmanuel just quickly here.

Um I was intrigued by your note that your top picks are not automakers themselves.

They are within the sort of component and technology universe, auto live active and te connectivity.

Just briefly.

Why do you like those the best uh in, in the coverage?

We worry that the automakers are past their, the peak of their earnings, they've benefited from optimal, you know, cyclical condition, vehicle prices have never been that high and these things will moderate and they need to keep having to make massive investments in electric vehicles and their capital returns as a result are suffering from that.

Uh conversely, the suppliers have sort of like, you know, reduced a little bit in the size of this investment.

They can really still benefit from secular trends.

And so we think their earnings will continue to grow and potentially re accelerate together with electric vehicles over the next few years.

But we're being very, very selective only the suppliers that can really deliver that earnings growth or these uh free cash flow return to shareholders a man.

Great to have you on the show.

Thanks for joining us.

Thank you.