Investors in Asia’s electric vehicle (EV) battery sector are keeping a close eye on the US presidential race, with even unexpected factors like Taylor Swift’s potential endorsements making waves. This heightened interest comes from the significant impact the election outcome could have on EV-related stocks, according to a recent Financial Times report.

Trump’s Stance and Investor Concerns

Donald Trump’s campaign rhetoric has sent alarm bells ringing in the EV industry. He’s vowed to end what he calls a “mandate to sell electric vehicles” if re-elected, claiming it would save the US auto industry from “complete obliteration.”

This stance has worried investors in EV-related stocks, who fear potential cuts to subsidies for battery makers and reduced tax incentives for EV buyers.

Biden’s EV Push and Asian Battery Makers

On the other hand, the current administration’s aggressive EV transition goals have been a boon for battery manufacturers, especially those in South Korea and Japan.

The Inflation Reduction Act of 2022 has provided significant tax credits, estimated to cost over $1 trillion over 10 years. These incentives have given Asian battery makers a competitive edge over their Chinese counterparts, who dominate the EV battery supply chain.

“Current US targets mean that around two-thirds of all new cars and trucks sold will need to be electric by 2032,” the report notes, highlighting the scale of potential demand. For instance, US tax credits added $785 million to Panasonic’s net profit in the fiscal year through March.

Market Reactions to Swift and Polls

The political uncertainty has led to volatile market reactions. Signs of public support for Kamala Harris, including Taylor Swift’s Instagram post, have boosted Asian markets.

Shares of South Korea’s LG Energy Solution have surged 25% from August lows, while Panasonic and Samsung SDI have seen 20% increases.

Foreign investors have been particularly active, with EV battery-related stocks dominating their top purchases in South Korea, closely tracking swing state polls.

Challenges Ahead

Despite the optimism, the EV battery sector faces significant challenges:

High valuations: LG Energy Solution is trading at over 100 times forward earnings, double its levels from last year and at a significant premium to global peers.
Disappointing sales: Major players like LG and Samsung have reported significant drops in sales and profits. Operating profit at LG Energy Solution fell 58%, while Samsung SDI saw a 24% decline in EV battery sales.
Overcapacity concerns: China, which accounts for more than half of the world’s EV battery demand, used less than 40% of its maximum cell output last year.
Slowing growth: While global EV sales are increasing, the rate of growth is decelerating.

EVXL’s Take

The political climate’s impact on the EV market is undeniable, and Taylor Swift’s influence on Asian markets is a fascinating twist. As we’ve seen in recent articles on Tesla et Lucide, the EV sector is not just about technology but also about policy and public perception. The Biden administration’s support has been crucial, but the industry must also address concerns about overcapacity and slowing growth.

Despite these challenges, the long-term potential of EVs remains strong. The shift towards electric vehicles is not just a trend but a necessity for a sustainable future. As investors and enthusiasts, we must stay informed and adapt to the changing landscape. The recent developments, as reported in our articles on GM et BMW, show that the industry is resilient and innovative.

The bigger picture is about more than just market fluctuations; it’s about the future of transportation and our planet. As we navigate these political and economic waters, let’s remember why we’re here: to support and advocate for a cleaner, more efficient world.

What’s your take on the future of EV batteries and how political changes might impact the industry? Share your thoughts in the comments below.