US ELECTIONS: Energy storage, EV suppliers upbeat despite election risks

Electric vehicles and battery storage systems, the electrochemical engines of change across US transportation and power sectors, have taken center stage in the runup to the Nov. 5 elections.

Tesla Inc. CEO Elon Musk has emerged as one of former President Donald Trump's biggest backers, funneling millions into his bid to reclaim the White House. The world's richest man, whose growing EV and energy storage empire is heavily regulated, is in line to head up a government efficiency task force if the Republican wins.

Musk, speaking on Tesla's Oct. 23 earnings call with investors, predicted strong growth in 2025 and beyond, reinforcing expectations that the US rollout of mobile and stationary lithium-ion batteries will proceed whatever happens at the ballot box. But the precise trajectory likely hinges on election outcomes, their impact on regulations and consumer choices, according to industry executives and analysts.

"The trend toward EVs is going to continue regardless of the election," said Stephanie Brinley, an associate director at S&P Global Mobility. "What's at stake is the pace of change."

Brinley and other analysts believe that a victory by Vice President Kamala Harris, coupled with Democratic control of Congress, is the scenario most likely to accelerate the growth of EVs, battery storage, renewable energy and other zero- and low-carbon technologies. That assessment largely rests on the assumption that Inflation Reduction Act (IRA) tax credits, estimated to be worth up to $1.2 trillion over 10 years, would be safe.

Under the Biden-Harris administration, automakers including Tesla, Toyota Motor Corp., Ford Motor Co. and General Motors Co. have combined with battery specialists like LG Energy Solution Ltd., SK On Co. Ltd. and Panasonic Holdings Corp. to commit $124 billion to build domestic electric vehicle and EV battery factories, according to the Alliance for Automotive Innovation, a trade group. A Harris presidency could move to expand federal government support further and attract additional private sector investment, especially with a Democratic sweep of the White House and Congress.

But even in a Republican sweep scenario, many view the federal government's support for clean energy technologies as relatively secure given that the vast majority of IRA-linked capital commitments and jobs are in Republican-leaning or swing states such as Georgia, Michigan, North Carolina, Ohio and Tennessee.

Call for 'balanced' tariff approach

John Zahurancik, president for the Americas region at Arlington, Virginia-based battery technology supplier Fluence Energy Inc., sees some similarities between Republicans and Democrats on trade policies.

"If you look at both candidates running for president, both parties have announced they believe there's going to be greater tariffs on China," Zahurancik said in an interview.

Trump's "America First" agenda leans heavily on tariffs to protect workers from "unfair foreign competition" and support domestic manufacturing. He has called for universal penalties on foreign goods, including at least a 60% tariff on imports from China.

Harris has criticized Trump's "disastrous trade war with China," panning his proposal for broad tariffs a "sales tax" on Americans. But if she wins, the Democrat is expected to largely continue President Joe Biden's trade approach — which has continued or expanded on some sanctions set in motion by the Trump and even Obama administrations.

The Biden-Harris administration in September boosted tariffs on EVs and EV batteries imported from China, the world's dominant producer. Rates for EV imports jumped to 100% from 25%, while rates for EV battery imports rose to 25% from 7.5%. Battery imports specifically for energy storage applications are slated to rise to 25% in 2026, from 7.5% currently.

"In every circumstance, we believe there's going to be more reasons to have domestic supply, and that having domestic supply reduces the overall concerns that some of the developers and utilities have," Zahurancik said. "You avoid the tariff issue. You avoid port congestion issues. You avoid geopolitical issues. You avoid national security issues."

Fluence recently began production of battery modules at a contract manufacturing facility in Utah, initially using lithium-ion battery cells shipped from abroad. The company plans to soon switch to cells from an expanding factory in Tennessee operated by Japan-headquartered AESC Group Ltd.

"The goal is to be at the forefront of capacity with as much domestic content as possible," Zahurancik said.

But the Fluence executive called for a "balanced approach" on tariffs, asserting that the US battery supply chain will still take years to build out and that sudden tariff shocks hurt US project owners and consumers more than foreign manufacturers.

"One of the things that we're seeing is that by having access to both foreign and domestic production, we can create the right mix that gives the customer the best price point relative to risk," he said. "The question is, how much we can do [and] how quickly? You can't create these factories overnight."

Most investment committed to building US battery cell factories is focused on EVs rather than energy storage.

Regulatory reckoning?

After announcing major US expansions between 2021 and 2023, many automakers in 2024 have tempered their EV rollouts as the breakneck pace of consumer adoption seemed to abate.

"In 2024, it's been all about slowing this down because consumers haven't caught up yet," said Brinley of S&P Global Mobility.

Regardless of who wins the election, the analyst sees a regulatory reckoning coming over emissions and fuel economy standards.

"As much as EV demand is growing and all-electrification is king, there is pushback, a little bit globally too," Brinley said. "There's going to be a recognition that consumers are not on board to buy at a level that would make these regulations practical."

The Biden-Harris administration in June unveiled stricter new corporate average fuel economy (CAFE) standards for light-duty vehicles, following the US Environmental Protection Agency's new tailpipe emissions rule for light- and medium-duty vehicles, announced in March.

Neither is an "EV mandate," as Trump has characterized them. The regulations do include fleetwide targets that automakers can meet with different mixes of battery electric vehicles, hybrids and cleaner gas vehicles. For model years 2030–2032, the EPA estimated that manufacturers "may choose" to produce battery electrics for 30% to 56% of new light-duty vehicle sales.

That compares with an estimated 9% in the US in 2024.

Zero-emission vehicle sales in California, including full electrics, gas-battery hybrids and fuel cell vehicles, are at roughly a quarter of total light-duty sales in 2024, according to the California Energy Commission. Under California's Advanced Clean Cars II regulations, that share would continue to rise to 35% by model year 2026, 68% by 2030 and ultimately 100% by 2035.

Although California's standard has been adopted by at least 11 other states and the District of Columbia, there has been some recent backlash as lawmakers in several states have introduced bills to detour away from or prevent going down California's road.

A US Supreme Court decision in June that overturned a long-standing legal doctrine known as Chevron deference created further uncertainty for EV-oriented regulations and delays on product planning decisions, according to Brinley.

"Every delayed decision fundamentally harms the industry and production development," she said.

But the outcome of the November elections will help make the US regulatory direction clearer.

"Just knowing whether the White House is Republican- or Democratic-controlled is going to answer a lot of directional questions," Brinley said.

If Trump wins and the Senate and House are split, S&P Global Mobility considers a freeze of emissions regulations covering model years 2028 through 2032 as probable, along with a halving of IRA tax credits for EV buyers. Under this election scenario, battery electric light vehicles would likely not surpass about 29% of total new light-duty sales by 2030.

A Harris win and split Congress would likely result in tax credits for EV buyers being protected and additional funding for EV charging, S&P Global Mobility analysts said in a recent special report on the election's possible impacts on the auto sector. Sales of full battery electric vehicles could reach about 35% of the overall light-duty fleet by 2030 under this scenario, they said, pointing to an increasing emphasis on hybrids.

'The fundamental fact'

Jeff Waters, CEO of Oregon-based energy storage system integrator Powin Energy Corp., is eager for this election season to end.

"From my perspective, I think what's most important is that we just get it over with, whichever direction it goes," Waters said in an interview. "If I were an EV manufacturer, I might have a different take on the whole deal, but for stationary storage I just don't see it having a massive impact."

Even with a Republican sweep, Trump "will not unravel much, even if he wanted to," Waters said, pointing to multibillion-dollar investments across "red states" that have been welcomed by local, state and federal lawmakers of both major parties.

"Could you see stiffer penalties on China? Yeah, certainly. But my expectation is that would be done consistent with driving a faster US supply chain," Waters said.

Perhaps the biggest election impact is that many investors are "sitting on the sidelines" at a time when the domestic energy supply chain should be emerging faster, he added. "They're kind of looking for almost any excuse to be pessimistic or risk averse. ... There's going to be an undersupply of 2026 cells for domestic US product."

For Fluence's Zahurancik, elections in the US or globally do not change "the fundamental fact" that low-cost solar and wind resources are attracting "the lion's share of investment" for new power supplies. "As renewables crowd out other kinds of generation, you have to have something that supports a firm reliable grid — and storage is one of the least-cost and most easily built resources to do that."

Energy storage equipment suppliers like Fluence, Powin and Tesla see all roads leading to a bigger role for grid-tied batteries in coming years.

Tesla's energy storage business is "growing like wildfire" and driving higher profits, Musk said on the company's third-quarter earnings call. Tesla, which expects to more than double its battery storage deployments in 2024, is preparing for further growth in 2025 and beyond. It recently ramped up a battery module factory for utility-scale systems in California to an annual run rate of 40 GWh.

"It won't be long before we're shipping 100 GWh a year of stationary storage," Musk said. "That will ultimately grow ... to multiple terawatt-hours per year. It has to ... in order to have a sustainable energy future."

Analysts at Jefferies LLC view Tesla's battery storage business as a bellwether for other suppliers and a sign of the industry's overall market prospects.

"Tesla's momentum is a leading indicator for many utilities accelerating storage in their long-term plans to achieve capacity objectives on a timely basis," the analysts said in an Oct. 25 note to clients.