Tesla jumps 18% with Trump 2.0, but will the new president abandon support for wind, solar and electric vehicles?

As Donald Trump decisively defeats Democratic candidate Kamala Harris to the White House, there will be winners and losers in business.

Among the biggest economic losers under Trump are likely to be clean energy companies, and the result of the presidential race will be less commitment to the renewable energy sector.

There has been a mixed reaction from the markets. Elon Musk’s Tesla is up 18 percent on the back of “Trump trading,” while First Solar fell 10 percent.

Kamala Harris was undoubtedly the greener of the two candidates.

Tom Sosnoff, chief executive of financial network Tastylive, said: “Trump has openly expressed his skepticism about global warming and climate change.”

Speaking last month after Hurricane Helene, Trump said: “Did you ever realize this was so important, the environmental issue… it’s one of the biggest scams of all time… people don’t do it anymore.” do you think?”

Helene was the strongest hurricane to hit the Big Bend area of ​​Florida since 1851, leaving more than 100 dead in its wake.

Trump expressed his views on climate issues earlier in the year, with the Republican candidate saying in July: “All the trillions of dollars that have not yet been spent, we will redirect them to important projects like roads, bridges, dams, and we will not allow Let it be spent on new ideas of ecological and meaningless scams.”

Trump, it seems that could be positive for traditional energy sectors.

Morgane Delledonne, head of investment strategy at Global inflation.

“This could lead to reduced federal support for renewable energy such as wind, solar and electric vehicles, with likely rollbacks to tax incentives and emissions regulations with a possible full repeal of the Inflation Reduction Act under a Republican sweep”.

However, Justin Onuekwusi, chief investment officer at St. James’s Place, notes that traditional energy sources fared better under Biden as a result of external geopolitical forces.

He said: ‘It is very important not to predict the reaction of sectors based on politics, because it is not only politics that can drive the market. What ultimately drives the market is profits. What impacts profits may be politics, but there are many other exogenous factors that can do so.”

Will Trump repeal the Inflation Reduction Act?

The Inflation Reduction Act, passed under Joe Biden, included $375 billion in climate incentives that could reduce U.S. emissions by two-fifths by 2030, including electricity emissions by 80 percent.

However, now that Trump is president, there is a chance the law could be repealed if he achieves a clean sweep. This could be difficult for companies in the clean energy sector.

A repeal, Rahul Bhushan, CEO of Ark Invest Europe, said, “could introduce immediate obstacles to clean energy projects, as the law’s financial incentives are crucial to many companies’ scale-up and innovation plans.”

“Major players in the renewable sector, including Tesla, Sunrun and First Solar, have aligned their strategies with these federal subsidies and a repeal would likely cripple expansions and reduce projected returns on their investments.”

Similarly, Sosnoff warns: ‘Clean energy companies that rely on government subsidies to improve competitiveness may face a reduced market presence (in the case of a full repeal), and companies that focus on clean technologies risk its financial viability without legal support, negatively affecting market confidence in renewable energy. .’

Bhushan, however, also maintains that a repeal would face significant obstacles, especially since the Biden administration has already pushed to allocate 90 percent of IRA funds by the end of fiscal year 2024.

“The likelihood of a complete repeal is low,” he said.

China will face heavy tariffs

Trump is more supportive of traditional forms of energy. “Drill, baby, drill,” the new president sang during the election campaign, promising to boost oil and gas production.

The country produced 13.4 million barrels of oil per day in August, a record.

Despite Trump’s rhetoric, the new Republican administration is unlikely to see a complete shift away from renewable energy.

However, nuclear power is more likely to be the main benefactor now that Trump returns to power.

“Trump has shown openness to nuclear power as part of a standalone energy mix, which could lead to investments in new technologies like small modular reactors (SMRs),” Delledone told This is Money.

And he added: ‘His administration can streamline regulatory processes, facilitating the advancement of new nuclear projects. However, without specific subsidies, nuclear energy can still compete with natural gas and renewables for investment.’

According to Bhushan, a key factor for Trump is the energy security that nuclear energy offers as an energy source.

He said: “With Trump favoring nuclear energy and natural gas, businesses in these areas could see a boost, particularly as nuclear energy gains renewed focus as a reliable, low-emissions energy source.”

“This diversity could offer a balanced energy strategy that includes greater emphasis on American energy independence.”

However, this could also benefit other parts of the renewable energy sector, as investment in wind and solar energy increases energy security.

According to Seb Beloe, head of research at WHEB Asset Management, this is where domestic companies could benefit from Trump.

He said: ‘We would expect US-based companies to benefit in any scenario. We believe FirstSolar is the only major US-listed solar module manufacturer and is best positioned given its domestic manufacturing footprint and US base.

“Chinese companies are likely to become increasingly excluded from the US market under a Trump presidency.”

Daniel Lurch, portfolio manager of the Green Planet fund at J. Safra Sarasin Sustainable Asset Management, said: “During his campaign, Trump has talked a lot about tariffs. Under his leadership, there could be an elevated risk of tariffs on clean energy imports. , particularly on solar and storage equipment from China.

‘This is not new, as both Democratic and Republican administrations have used and expanded tariffs.

‘For example, let’s remember that Trump already implemented a 30 percent tariff on imported solar cells under Section 201, which Biden expanded to 15 percent.

“We believe any new tariffs will incentivize developers to dig deeper into the territory and boost their supply chains, which should benefit domestic solar and storage equipment manufacturers.”