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If President Trump’s proposed 25% tariffs on Mexico and Canada — which were set to begin tomorrow morning before the two countries’ leaders negotiated 30-day delays — were to go into effect, they would hit automotive supply chains like a lightning bolt. A single spring inside a fuel pump can zig-zag across the northern and southern U.S. borders half a dozen times before making it into a vehicle. The jolt of tariffs would follow it, gathering force at each crossing before shocking car buyers with higher prices.
Electric vehicles, however, famously do not have as many parts as conventional cars. There’s no engine, transmission, exhaust system, or fuel pump. EV drivers will also not have to contend with the effect of tariffs on the price of gasoline. So does it follow that, despite Trump’s wish to undo Biden’s EV subsidies, he would actually be making battery-powered cars more competitive?
Experts I spoke with agreed that EV manufacturers might be somewhat less exposed. But the tariffs will still affect them, and the small edge could be outweighed by other Trump administration policies.
An internal combustion engine vehicle can have 20,000 to 30,000 parts, Amy Broglin-Peterson, an expert in automotive supply chains at Michigan State University, told me; an electric vehicle might have anywhere from several hundred to a few thousand. Many of these components are manufactured by independent specialists throughout North America. “They’ll be assembled utilizing cheaper Mexican labor, and then they’ll cross back into the U.S. and be put into a bigger assembly, which is then sent back down again for either more assembly work or finished vehicle production,” she said.
Electric vehicles also contain many of the same complex components as conventional cars, like seats and lights and dashboards and radios and mirrors. “That’s kind of the great equalizer amongst these different vehicles,” Mike Wall, an auto analyst at S&P Global Mobility told me. “They’re all going to be in the same soup in terms of vulnerability to cross-border trade.”
But EVs lack the most complex component of all — the engine. Instead, EVs have a battery, and many automakers are either already producing their batteries in the U.S. or are building new factories to do so. As of December, there were more than 80 facilities making battery components, assembling battery packs and cells, manufacturing drive units, producing EV chargers, and doing final EV assembly in the U.S., according to a database maintained by Wellesley University historian Jay Turner. But that’s set to increase over the next few years due to tax incentives and grants that were part of Biden’s Bipartisan Infrastructure Law and Inflation Reduction Act, which reward domestic manufacturing of clean technology components. More than 200 additional facilities, including critical mineral extraction and processing facilities, are in various stages of development.
Broglin-Peterson told me her quick answer to my question is that EVs likely wouldn’t be hit quite as hard by tariffs as conventional cars. But she emphasized that they will still see an impact, and she wasn’t sure of the extent to which other Trump administration policies would undermine any tariff-related advantages. “The EV picture right now has become a lot more murky, obviously, since President Trump was elected,” she told me. “I do think the traditional automakers are more heavily leveraged, though, on their internal combustion engine supply chains.”
Wall agreed that EVs were somewhat less exposed, but he said it really depends on which internal combustion engine vehicle you’re comparing them to. Some engines are assembled in the U.S. and have more U.S.-manufactured components than others. Battery makers are still vulnerable, as the processing of the critical minerals that go into EV batteries is currently heavily concentrated in China, which will also be hit by 10% tariffs on top of existing tariffs on Chinese goods. When you take into account the president’s plans to end the electric vehicle tax credit and leasing option, which can shave up to $7,500 off a car’s sticker price, EVs could still end up less competitive than before Trump took office, Wall said.
Some electric vehicle producers will be hit harder than others. Tesla, for instance, has one of the lowest exposures to non-U.S. content, according to data collected by the Department of Transportation. But some 20% to 25% of Tesla components come from Mexico.
“There’s a lot of uncertainty around tariffs,” Vaibhav Taneja, Tesla's chief financial officer, said during an earnings call last week. “Over the years, we’ve tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses.” The company’s stock price dropped 5% on Monday, though that may be partly because the company also lost market share in Europe.
Rivian builds its EVs in Illinois and is opening a second factory in Georgia. But the company’s CEO RJ Scaringe told Inside EVs that tariffs will still hurt. “Many, many, many hundreds of billions of dollars have been invested in Mexico in production capacity for supply chains that supply to all of us,” he said. “That will need to get remapped or will just carry higher costs.”
Other manufacturers are more spread out. Ford assembles its Mustang Mach-E in Mexico and its F-150 Lightning in Michigan. GM makes its Chevy Silverado, GM Sierra, and Cadillac Escalade EVs in Michigan, but its Equinox and Blazer EVs in Mexico. Stellantis makes its electric Jeep Wagoneer in Mexico, but recently invested more than $400 million to prep three of its Michigan factories for EV assembly.
Analysts told me not to expect any sudden moves from car companies. “Revamping the automotive supply chain to be 100% U.S. based is probably not realistic,” David Whiston, an equity strategist who covers the auto sector for Morningstar, told me in an email. “Companies right now are not willing to pivot capacity on a dime — they won’t allocate capital without more certainty.”
Trump doesn’t have much interest in certainty. After threatening to put the tariffs into immediate effect last weekend, the president quickly struck agreements with Mexican president Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau on Monday to pause the tariffs for 30 days while the countries negotiate. He has yet to discuss next steps with China.
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“You can’t just divest from the eco-right after the election,” contends Johannes Ackva of Founder Pledge.
Johannes Ackva likes a contrarian bet. Back in 2020, when he launched the climate program at Founders Pledge, a nonprofit that connects entrepreneurs to philanthropic causes, he sought out “surgical interventions” to support technologies that didn’t already enjoy the widespread popularity of wind turbines and solar panels, such as advanced nuclear reactors and direct air carbon capture.
By late 2023, however, the Biden administration’s legislative sweep was directing billions to the very range of technologies Ackva previously saw as neglected. So he turned his attention to shoring up those political wins.
The modern climate movement came into its own demanding that the world stop shrinking from inconvenient truths. But as polls increasingly showed the 2024 election trending toward Republicans, Ackva saw few funders propping up advocates with any influence over the GOP. Founders Pledge pumped millions into Deploy/US, a climate group where former Republican Representative Carlos Curbelo of Florida served as the top adviser, which then distributed the money to upward of 30 right-leaning climate groups, including the American Conservation Coalition and the Evangelical Environmental Network.
The bipartisan gamble paid off. In April 2024, Founders Pledge received an anonymous $40 million donation to bolster its efforts. Now an anonymous donor has granted Founders Pledge’s climate fund another $50 million, Heatmap has learned.
Founders Pledge declined to say whether the money came from the same unnamed source or separate donors. But the influx of funding has “radically transformed our ability to make large grants,” Ackva told me, noting that the budget before 2024 came out to about $10 million per year.
“The word exponential is overused,” he said. “But that’s roughly the trajectory.”
Amid the so-called green freeze that followed the Trump administration’s rollback of climate funding, Founders Pledge has joined other climate philanthropies in stepping in to back projects that have lost money. When Breakthrough Energy shuttered its climate program in March, Founders Pledge gave $3.5 million to serve as the primary funding for the launch of the Innovation Initiative, started by former staff from the Bill Gates-backed nonprofit.
Ackva said his organization is looking to invest in climate efforts across the political spectrum. But Founders Pledge’s focus on right-of-center groups wasn’t an election-year gimmick.
“You can’t just divest from the eco-right after the election,” he said. “That’s not an authentic way to build a civil society ecosystem.”
As Republicans in Congress proceed with their gutting of green funding, including through Trump’s One Big, Beautiful Bill Act, Ackva said it’s too soon to say whether the political strategy is paying off.
“If you think of grantmaking as making bets, some bets exceed others sooner, but that doesn’t make them bad bets,” Ackva told me. “Ultimately, philanthropy cannot define how a given policy goes. You can adjust the probabilities, maybe level the bets. But obviously it’s larger forces at play that shape how the One Big, Beautiful Bill gets made.”
The Senate may save or even expand parts of the IRA that support baseload power, e.g. nuclear and geothermal. But regardless, Ackva said, climate advocates are making a mistake training their focus so intently on the fate of this one law.
“It’s kind of the only thing that’s being discussed,” he said.
Meanwhile the Infrastructure Investment and Jobs Act, better known as the Bipartisan Infrastructure Law, is set for reauthorization next fall. The Energy Act of 2020 is slated for renewal this year. And funding for the Department of Energy is up for debate as the White House now pushes to expand the Loan Programs Office’s lending authority for nuclear projects by $750 million.
“Those are things we would see as at least as important as the Inflation Reduction Act,” Ackva said.
Given those deadlines, Ackva said he expected other donors to press advocates for plans last year on how to sway Republicans toward more ambitious bills this Congress. But after former Vice President Kamala Harris took over the Democratic ticket last year, he said he’d heard from his grantees “that they were asked what they were going to do with a Harris trifecta.”
“Everyone was betting on Harris to win,” he said. “There’s a very strong ideological lean among climate funders to a degree that was frankly a little bit shocking.”
The partisan divide over climate wasn’t always so pronounced. In 2008, the Republican presidential nominee, John McCain, ran on a more ambitious decarbonization platform than what President Barack Obama proposed in the White House.
There are dueling — though not mutually exclusive — narratives about how the American climate movement over-indexed on one side of the political spectrum. Both stories start in 2010.
The version liberals and leftists will find familiar is one that blames fossil fuel megadonors such as Charles and David Koch for aggressively promoting climate denial among Republican lawmakers.
The version told by Ted Nordhaus, the founder of the Breakthrough Institute think tank where Ackva got his start years before joining Founders Pledge, starts with the failure of the Obama-era cap-and-trade bill to pass through Congress.
When the legislation “went up in flames in 2010,” Nordhaus told me, a bunch of environmental philanthropies hired Harvard professor Theda Skocpol to author a 145-page report on what triggered the blaze.
“The report concluded that the problem is we were too focused on the technocratic, inside-the-Beltway stuff,” Nordhaus summarized. “We needed to build political power so the next time there’s an opportunity to do big climate policy, we would have the political power to put a price on carbon.”
Out of that finding came what Nordhaus called the “two-pronged, boots-on-the-ground” era of the movement, which backed college campus campaigns to divest from fossil fuels and also efforts to prevent new fossil fuel infrastructure such as the Keystone XL pipeline.
Reasonable people could debate the fiduciary merits of scrapping investments in natural gas companies or the value of blocking oil infrastructure whose cancellation spurred more shipments of crude on rail lines that face higher risk of a spill or explosion than pipelines. But once supporting fossil fuel divestment or opposing pipelines became the key litmus tests activists used to determine if a Democrat running for office took climate change seriously, the issue became more ideological.
“That made it impossible for any Democrat to become a moderate on climate, and made it impossible for any Republican to be a moderate on climate,” Nordhaus said. “The Republican Party has its own craziness and radicalism, but a bunch of that is negative polarization.”
To fund an effective “climate right,” Nordhaus said, Founders Pledge should seek out groups that don’t explicitly focus on the climate or environment at all.
“I’d be looking at which groups are all-in on U.S. natural gas, which has been the biggest driver of decarbonization in the U.S. over the last 15 years; which groups are all in and really doing work on nuclear; and which groups are doing work on permitting reform,” Nordhaus said. “That’s how you’re going to make progress with Republicans.”
I asked Ackva where the line would be for funding an eco right. Would Founders Pledge back groups that — like some green-leaning elements of Italian Prime Minister Giorgia Meloni’s party or allies of France’s Marine Le Pen — support draconian restrictions on immigration in the name of reducing national emissions from the increased population?
“That would not be appropriate,” Ackva told me. “When we say we’re funding the eco right, like when we’re funding groups on the left or in the center, the things they are proposing don’t need to be exactly the things we will be prioritizing, but they need to be plausible, high-impact solutions.”
To Emmet Penney, a senior fellow focused on energy at the right-leaning Foundation for American Innovation, it’s an obvious play. The green left that has long dominated climate policy debates “is premised on aggressive permitting and environmental law that makes it impossible to actually build anything useful toward addressing the things they’re most afraid of.”
“It’s become clear to anyone who wants to build anything that what the environmental left has to offer simply doesn't work,” he told me. “Naturally, more centrist organizations who might not even otherwise be slated as right-wing now look that way and are becoming increasingly attractive to people who are interested in building.”
On Senate committees, a public lands selloff, and energy investment
Current conditions: Southern New England will experience its hottest day of the year so far today, with temperatures around 90 degrees Fahrenheit • Record levels of Sargassum seaweed are overwhelming Caribbean resorts • Saharan dust has spread across most of Florida and will continue over the coastal Southeast through this weekend.
1. The Senate’s first pass at IRA repeal cuts huge climate programs ...
On Wednesday evening, Republicans on the Senate’s Environment and Public Works Committee released their section of President Trump’s “One Big, Beautiful” budget reconciliation bill. “At least so far, it’s hardly deviating from the stark cuts to the Inflation Reduction Act that have already passed the House,” my colleague Emily Pontecorvo wrote in her analysis of the contents — although there is one Environmental Protection Agency grant program, for reducing pollution at ports, that had been targeted in by the House bill and is absent from the Environment and Public Works Committee’s text. As in the House bill, the latest text eliminates the $27 billion Greenhouse Gas Reduction Fund, which the Trump administration has sought to kill with accusations of fraud, though it has yet to produce any evidence of impropriety.
Elsewhere in the Senate, however, some Republicans appear more friendly toward preserving at least some IRA tax credits. “I would be in the camp that doesn’t think we need [to do] a full repeal and instead can live with a circumscribed, narrower version of the existing IRA credits,” Senator Todd Young of Indiana, a member of the Finance Committee, said, as reported by Axios. Senator John Curtis of Utah published an op-ed in Deseret News on Wednesday in which he argued that “the right policy solution must navigate tax credits and regulatory reform in what I believe is central to America’s economic future, the planet and our national security: energy.”
2. … and a public lands sell-off is back on the table
Senate Republicans are reviving a plan to sell off public lands to fund President Trump’s tax cuts after their colleagues in the House thwarted a similar proposal, Senator Mike Lee of Utah told reporters on Wednesday. According to the senator, a new version of the plan will be included in the Committee on Energy and Natural Resources’s pass at the bill, which will likely be made public on Monday, Bloomberg reports.
Representative Ryan Zinke of Montana helped lead the charge to kill the earlier version of the proposal in the House, although Lee added that his version would exempt Montana. Still — as I’ve reported — the plan would jeopardize as much as 500,000 acres of public land across Utah and Nevada alone. “These are the places people recreate with their families, they are places to hunt and fish, and they are held in trust for the American people to enjoy for generations to come,” Travis Hammill, the D.C. director for the Southern Utah Wilderness Alliance, said in a statement.
3. 2025 will be a banner year for energy investment, despite economic turbulence: IEA
Despite tariffs, trade wars, and economic uncertainty, the International Energy Agency anticipates a record $3.3 trillion investment in global energy in 2025, per a new report released Thursday. That represents a 2% rise from 2024. “The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects,” IEA Executive Director Fatih Birol said in a statement about the findings.
Around $2.2 trillion of the total global investment is “going collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification, twice as much as the $1.1 trillion going to oil, natural gas, and coal,” the report says. Solar specifically is booming, with a forecast of $450 billion in investment by 2025. The overall picture represents an enormous reversal from a decade ago, when fossil fuel investments were 30% higher than electricity generation, grids, and storage. That said, the research also found that investment in grids — at around $400 billion per year — is “failing to keep pace with spending on generation and electrification,” mainly because of “lengthy permitting procedures and tight supply chains for transformers and cables.” Read the full report here.
4. UK solar is having a record year due to unusually sunny spring
Carbon BriefSolar farms in the United Kingdom generated more electricity than ever before in the first five months of the year, according to a newly released accounting by Carbon Brief. The surge in solar energy was 42% higher than over the same period last year, growing from 5.4 terawatt-hours of electricity generated to a record 7.6 terawatt-hours. Carbon Brief credited the record output to the nation’s sunniest spring on record, although the publication notes it was also “aided by rising capacity, which reached 20.2GW in 2024, up by 2.3GW from 17.9GW a year earlier.” You can read the full report here.
5. ‘Atmospheric thirst’ is making droughts more severe: study
While extreme heat almost always has a climate change signal, the same cannot be said for droughts, which have different causes and feedback mechanisms that researchers are still working to understand. A new study published Wednesday in Nature has found that atmospheric evaporative demand — that is, the complex process of water evaporation into the atmosphere, also called “atmospheric thirst” — has increased drought severity by an average of 40%. Over the five years from 2018 to 2022, areas in drought have expanded 74% on average compared to the 1981 to 2017 period, with atmospheric evaporative demand “contributing to 58% of this increase,” the report further found. “We were very much shocked when we saw the results,” Solomon Gebrechorkos, a hydroclimatologist at the University of Oxford and lead author of the study, told The New York Times.
“A large majority of new residential houses and buildings in Germany feature a heat pump as their main heating system,” according to government numbers reported by Clean Energy Wire. “The climate-friendly heating technology was installed in more than two-thirds (69.4%) of the 76,100 homes finished in 2024, a 5% increase compared to 2023.”
The Environment and Public Works Committee largely preserved the cuts made by the House, with one odd exception.
The Senate GOP began working through Trump’s “One Big, Beautiful” budget reconciliation bill this week, and at least so far, it’s hardly deviating from the stark cuts to the Inflation Reduction Act that have already passed the House.
Republicans on the Environment and Public Works Committee released their section of the bill on Wednesday evening, and it retains many of the policy repeals and funding rescissions that were in the House version.
To be clear, it does not touch the IRA’s clean energy tax credits, the most controversial climate-related parts of the package. Their fate will be up to the Senate Finance Committee, which is not expected to release text for its section of the bill until at least next week. There has been no indication that Republicans in the upper chamber intend to fight for any of the myriad grant programs the IRA created.
Still, I’m looking closely to see if some of it might yet be saved. For example, there is, oddly, one Environmental Protection Agency grant program targeted by the House bill that is absent from this first text from the Environment and Public Works Committee: $3 billion to reduce air pollution at ports.
Here’s what is in the text.
The text published Wednesday would repeal and rescind funding for more than two dozen programs, most of which are administered by the EPA, the Department of Transportation, and the General Services Administration. The Greenhouse Gas Reduction Fund, the now-infamous lending program for clean energy projects targeted by EPA Administrator Lee Zeldin as a wasteful, fraudulent scheme perpetrated by the Biden administration, is still on the out list. Same goes for funding for oil and gas producers to reduce their methane emissions, plus a related fee that would be levied on operators who did not reduce methane leakage below a certain threshold.
The full list of cuts:
The text would also rescind two new pots of money that were not touched by the House bill — funding for Endangered Species Act recovery plans, strategies developed by the U.S. Fish and Wildlife Service to help threatened species thrive again, and general funding for the White House Council on Environmental Quality to train staff, do environmental reviews, and improve stakeholder and community engagement.
Like the House bill, the Senate committee’s text includes instructions to repeal the latest update to the nation’s tailpipe emissions standards for cars. The regulations are required under the Clean Air Act and were strengthened under the Biden administration for model years 2027 through 2032, requiring automakers to sell an increasing proportion of electric vehicles over time.
It would not, however, repeal the latest Corporate Average Fuel Economy standards (also known as the CAFE standards), which regulate how far a vehicle must be able to travel on a gallon of fuel and were targeted by the House bill.
This provision is one I’ll be watching closely, as Democrats are likely to challenge its inclusion. If Republicans want to pass the budget bill with a simple majority, they can only include policies that affect the federal budget, and as the Environmental Defense Fund told me, these standards are “regulations, not budgetary provisions.”
The text proposes the same pay-to-play permitting scheme that was in the House bill and would allow energy infrastructure developers to pay for expedited permitting. Like the House bill, it also asserts that environmental assessments made under this program “shall not be subject to judicial review.”
Coming up, we’ll be on the lookout for a text from the Energy and Natural Resources committee, which will reveal whether Senate Republicans have any interest in saving the Department of Energy’s loan guarantee program, administered by the Loan Programs Office, which provides essential support for the nuclear industry.