KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Key Takeaway: Trump's team targets eliminating the $7,500 EV tax credit, which could stall the US electric vehicle (EV) transition, hurt Tesla’s competitors, and reshape the auto industry landscape.
President-elect Donald Trump’s transition team is preparing to eliminate the $7,500 consumer EV tax credit, a key component of President Biden’s Inflation Reduction Act (IRA). The proposal is part of a broader tax-reform agenda to fund other initiatives, including extending Trump-era tax cuts.
Impact on EV Market and Automakers:
- Tesla’s Advantage: Tesla CEO Elon Musk supports ending the tax credit, citing its long-term benefit to Tesla by weakening competitors like General Motors (GM) and Ford, which are still ramping up EV production.
- Tesla sold nearly half of all US EVs in Q3 2024 and benefits from lower production costs.
- Musk noted that removing the subsidy would be "devastating" for competitors but manageable for Tesla.
- Competitor Challenges: Rivals like GM, Ford, and Hyundai rely heavily on the subsidy to offset losses on EVs. Ford, facing $5 billion in EV losses this year, has already idled production of its electric F-150 Lightning due to weak demand. GM, which received $800 million in EV manufacturing credits this year, would face significant setbacks without the subsidy.
Political and Economic Context:
- The move aligns with Trump’s “America First” energy agenda, which prioritizes oil production and seeks to roll back Biden’s clean-energy initiatives, including subsidies for wind and solar power.
- Trump’s transition team, led by oil magnate Harold Hamm, sees removing the EV tax credit as an easy target to achieve Republican consensus and offset the cost of extending tax cuts.
Broader Implications:
- Struggling Competitors: Losing the subsidy could cripple emerging US EV players trying to compete with Tesla and fend off heavily subsidized Chinese EV manufacturers like BYD.
- Labor Concerns: The United Auto Workers (UAW) union opposes repealing the tax credit, warning it could threaten hundreds of thousands of auto-industry jobs.
- Market Shift: Without subsidies, US automakers may pivot toward profitable gas-powered SUVs and trucks, delaying EV adoption.
Global Dynamics:
- While Tesla dominates the US market, its share in China—the world’s largest EV market—is shrinking due to local competition. Trump’s protectionist policies, such as high tariffs on Chinese EVs, could shield Tesla from overseas rivals.
Outlook: The elimination of the EV tax credit signals a major policy shift that may benefit Tesla but disrupt the broader US auto industry’s transition to electric vehicles. As GM, Ford, and others scramble to adapt, the long-term impact on US manufacturing competitiveness remains uncertain.
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