Here's what a Trump victory could mean for the entire EV industry

• Trump has been critical of EVs and Biden's policies to encourage manufacturing and sales. 
• The potential loss of a $7,500 tax credit has sparked concern in the EV industry. 
• Still, Trump has gained the support of Elon Musk, who may be betting that his presidency will benefit Tesla. 

Donald Trump has been an outspoken critic of EVs — and that could spell trouble for America's electric vehicle industry.

His rhetoric has made it clear that the former president's return to the White House — which looks increasingly likely according to the most recent polls — will pose a reckoning for the US' already-flagging EV industry.

Despite this, Trump's candidacy has attracted the support of a man whose wealth depends almost entirely on electric cars — Elon Musk.

A Trump charm offensive

The billionaire officially endorsed Trump following his attempted assassination this month, and reportedly plans to donate $45 million a month to pro-Trump super PAC as he throws his enormous wealth behind Trump's re-election bid.

Musk also reportedly played a part in Trump choosing Ohio senator JD Vance, an even fiercer critic of electric vehicles, as his vice president.

His selection as Trump's running mate was favorably received by Musk. But Vance introduced legislation last year to repeal the $7,500 tax credit for US-made electric vehicles and has accused Biden of "subsidizing an industry that benefits Communist China more than it does American workers."

Musk has defended Vance's proposals, saying removing the subsidies would "only help Tesla" — but that's at odds with Tesla's marketing, with the federal tax break included in price breakdowns on the company's website and promoted on Tesla's social media.

Subsidy fears

The potential loss of the $7,500 tax credit has already sparked concern in the EV industry.

General Motors board member and former Tesla president of global sales Jon McNeill warned that rolling back on this tax credit would hand Chinese manufacturers like BYD, who benefit from significant state support, a huge advantage over their US rivals.

"I think we risk losing the auto manufacturing share to China. We really do, globally," he told CNBC.

Dylan Khoo, an EV analyst at intelligence firm ABI Research, told Business Insider that the cost of EVs is one of the key factors holding consumers back from going electric.

"If we see that tax credit cut, then EVs start looking insurmountably expensive for most consumers," he said.

Sam Fiorani, vice president of Global Vehicle Forecasting at automotive consultancy AutoForecast Solutions, told BI that the tax credit had become increasingly targeted at middle-class vehicle buyers in recent years.

"Pulling it away will lessen the opportunity for middle-class people to entertain the idea of an electric vehicle, and potentially make the industry less competitive by raising prices," he said.

Ultimately, the political uncertainty surrounding the election is probably already a factor causing automakers to reconsider their EV plans, Khoo said.

He warned the withdrawal of government support could have dire consequences for legacy automaker's mostly unprofitable EV businesses.

"It could be potentially fatal to the industry," said Khoo.

Elon Musk's gamble

This grim picture leaves Musk's full-throated support for Trump looking somewhat contradictory.

The billionaire has been on a Trump charm offensive for months, telling shareholders Trump would often "call him out of the blue," and that he was trying to convince the former president of the benefits of EVs.

That strategy appears to be working. In a recent interview with Bloomberg Businessweek, Trump said he had "no objection" to EVs and praised Musk as "fantastic" — but he still warned that the US could not have 100% of its cars electric, and criticized them for being too heavy and expensive.

Some experts think there is method in Musk's apparent madness.

Dan Ives, an analyst at Wedbush Securities, wrote in a recent note that while a Trump presidency would be broadly negative for EVs, it may prove a positive for Tesla.

"Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment," said Ives, adding the company would also benefit from the fact Trump is likely to impose higher tariffs on China's EV giants.

Khoo agreed, telling BI that Tesla has the market share and the production scale to survive a withdrawal of government subsidies, while its rivals do not.

"If you can already do something without the support, and it's going to help the competitors to catch up to you, you can secure your position in the market and maintain that," he said.

"A lot of these incentives are helping other companies transition towards electric vehicles, and Tesla's already there with 15 years of history behind them," said Fiorani.

"They're already making money building electric vehicles, and the incentive just helps boost volume rather than boosting profits," he added.

With Tesla's market share beginning to slip as other automakers ramp up their EV efforts, Musk seems to be gambling that this prediction will come to pass.