"Electric Vehicle Investment = Anti-Trump Investment"
Concerns Over Sales Slowdown Rise... Warren Buffett Also Pulls Out Funds
With the possibility of former President Donald Trump winning the upcoming U.S. presidential election in November increasing, investors are reportedly withdrawing from electric vehicle funds, Bloomberg reported on the 6th (local time).
According to financial information firm EPFR Global, electric vehicle funds saw a net outflow of $1.6 billion (approximately 2.2021 trillion KRW) as of July 31 this year. This amount exceeds the total redemptions for 2023.
Vicki Chi, a portfolio manager at Robeco, said, "Investing in electric vehicles has become an anti-Trump investment," adding, "Despite the fact that more and more electric vehicles can be seen on the roads, there are very few companies making profits and even fewer with prospects for profit growth."
According to EPFR, electric vehicle funds in China, the world's largest electric vehicle market, recorded redemptions of about $500 million (approximately 688.3 billion KRW) in the first half of the year. The U.S., South Korea, and Japan also experienced net outflows in the second quarter.
Berkshire Hathaway, led by Warren Buffett, reduced its stake in BYD, China's largest electric vehicle manufacturer, to less than 5% last month. Two years ago, Berkshire held more than 20% of BYD's shares.
Former President Trump criticized the Biden administration's policies that provide incentives for electric vehicles even after Elon Musk, Tesla's CEO, declared his support. He also argued that electric vehicles would only be a part of the automotive market alongside internal combustion and hybrid vehicles. Furthermore, he stated that if re-elected, he would partially repeal existing electric vehicle policies and increase tariffs on Chinese electric vehicle imports up to 200%. Recently, at a campaign rally, he criticized, "Electric vehicles don't go far, are too expensive, and are all made in China. Other than that, they're fantastic."
Bloomberg said such movements risk deepening concerns about the slowdown in electric vehicle sales growth and cause investors to reassess their outlook on electric vehicles.
Analysts including Bill Peterson of JP Morgan Chase noted in a recent report that if former President Trump is elected, tax credits under the Inflation Reduction Act (IRA) could be revoked, and federal funding for electric vehicle-related infrastructure might be withdrawn.
Last month, CEO Musk said that the elimination of electric vehicle subsidies by former President Trump would somewhat impact Tesla but would be fatal to competitors. Ford Motor Company and Mercedes-Benz Group also lowered their growth outlooks for electric vehicles, and Volkswagen's Porsche retreated from its goal of having electric vehicle models account for 80% of new car sales by 2030.
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