No EV Credits, No Problem: Mining Giants Still See Green In Trump Deregulation Push

The revoking of the $7,500 electric vehicle (EV) tax credit by former U.S. President Donald Trump may have temporarily slowed down the demand for critical minerals like lithium and other essential minerals, but analysts and industry leaders suggest that it is unlikely to hinder the growth of the mining sector, particularly against the backdrop of surging global EV demand.



Glyn Lawcock, an analyst at Australian investment bank Barrenjoey, stated, "Whenever subsidies or incentives are cut, demand expectations are impacted. But ultimately, even if U.S. EV demand slows down somewhat during Trump’s term, the demand will still grow." Liontown Resources, an Australian lithium producer, noted that the global transition to electric vehicles is already underway, regardless of U.S. participation. Liontown CEO Antonino Ottaviano mentioned, "From a long-term perspective, I believe the demand issue won’t be substantial."

Much of the EV industry's growth happens in China, which accounts for 11 million sales or 65% of the market compared with North America, which accounts for 20% of the market. The rest of the world already accounts for 1.3 million EV sales and is growing at 27% year on year, a trajectory that will see it become more meaningful than the entire North American market in less than two years.



Despite Trump's rollback of EV targets, mining companies remain optimistic about the long-term demand for critical minerals. Rio Tinto RIO CEO Jakob Stausholm, for example, remains bullish on the global demand for lithium, stating, "Lithium demand will probably go up another five times over the next 15 years." Mining companies may continue to invest in critical mineral projects, as the global demand for EVs and related technologies is expected to grow significantly. This growth potential is something Chinese EV manufacturers are chasing, given they are locked out of the U.S. market due to 100% EV tariffs imposed by Biden.

Grid-scale batteries that store days' worth of electricity are rising in popularity across the world, further increasing the demand for critical metals. These metals are also used to build many consumer electronics as well as computer servers needed to power the artificial intelligence industry.

Measures to wean Western manufacturers off Chinese supplies will underpin support for critical minerals, as companies seek to build supply chain independence from China. This could have a more significant impact on the mining industry than the rollback of formal targets for EV sales.

In conclusion, while Trump's stance on EVs and related incentives may temporarily slow down the demand for critical minerals, the global EV demand and the need for supply chain independence from China are expected to drive mining companies' investment decisions and maintain their stock performance in the long run.