Auto stocks: Election risk is called out by Wells Fargo if either candidate wins

Wells Fargo sees risk for auto stocks if either presidential candidate wins the election.

Analyst Colin Langan noted that candidate Donald Trump has said he is willing to cut the $7.5K IRA electric vehicle credits, essentially raising EV prices for most buyers. Langan said that with rising EPA targets, automakers would likely need to cut electric vehicle prices further, which would add to EV losses. “If Trump wins & Republicans gain control of the House, it is possible parts of IRA get cut well before EPA rules ease (~2028),” highlighted Langan. He warned that Tesla (NASDAQ:TSLA) was most at risk from that scenario, but Detroit automakers General Motors (NYSE:GM), Ford Motor (NYSE:F), and Stellantis (STLA) would all see financial hits as well. Per Langan, A new Trump administration would also present tariff risk for automakers, similar to the first Trump presidency when commodity and supply chains were higher.

On the flip side, Langan said that if candidate Kamala Harris were to win, investors in the auto sector could be impacted by tougher CO2 targets, long-term EV mix headwinds, and higher U.S. corporate tax rates. Those factors are all seen making the auto sector unattractive. While Harris is more dovish on tariffs, Langan and his team still see a negative tariff impact.

Heading into the election, Wells Fargo has Underweight ratings on Tesla (TSLA), General Motors (GM), Ford Motor (F), and Stellantis (STLA). Meanwhile, Rivian Automotive (RIVN) is slotted at Equal Weight. “The enthusiasm in the stock is a testament to consumer and investor optimism about RIVN’s disruptive technology, product and brand strategy, and high-powered partnerships. However, the company has a low margin for error in all aspects of its business. Its limited production and commercial history leaves much to be seen,” highlighted the firm.

Ferrari (RACE), General Motors (GM), and Honda Motor (HMC) are the only auto manufacturer stocks with positive year-to-date returns.