President Donald Trump’s Department of Energy (DOE) is preparing proposals to claw back billions in grants that were pledged under the prior administration to companies including General Motors, Ford, and a wide range of startups. This sharpening of fiscal discipline comes amid broader budget cuts that threaten to cool the momentum in clean energy, mobility, and industrial modernization.

Scope of the Proposed Cuts and Targeted Sectors

Among the funding at risk are grants tied to EV plant conversions, industrial decarbonization, and clean-energy infrastructure. Reports suggest that GM previously secured half a billion dollars for converting Michigan facilities, while automakers like Stellantis also benefited from grants for retooling plants for electric vehicle and component production. The DOE reportedly is reassessing roughly $12 billion in awards and may cancel $7–8 billion deemed to offer insufficient taxpayer return.

The proposals extend beyond traditional incumbents: many clean-tech startups that were relying on DOE support for emerging projects—such as hydrogen hubs, battery plants, grid modernization, and carbon capture demonstration schemes—face existential threats. These programs often carry high upfront risk and long time horizons, making them especially vulnerable in budget retrenchments.

Market Reaction and Capital Flow Risks

Markets have reacted with caution. Automakers with substantial reliance on government funding or incentives may see their cost of capital rise and project timelines slip. Equity valuations could be re-discounted to reflect higher regulatory and policy risk, especially in sectors already grappling with supply chain inflation and raw material volatility.

For startups, access to grant capital often unlocked private co-investment from venture funds or strategic backers. Removing that anchor may deter follow-on funding, slow deployment, or force companies to rely more heavily on debt or less favorable equity terms. International investors watching U.S. policy may reassign risk premia in valuations of clean energy and mobility tech globally.

Macroeconomic and Strategic Implications

At the macro level, these cuts dovetail with broader efforts to shrink non-defense discretionary spending. The DOE overall budget is slated to see significant reductions, including deep cuts to renewable and efficiency offices. Budget proposals suggest subtracting as much as $19.3 billion from DOE allocations, with steep reductions in climate-oriented programs.

Strategically, the decision signals a pivot: from subsidy-driven, government-led tech deployment toward a stance emphasizing private markets and return thresholds. Critics warn it may slow U.S. leadership in critical sectors like clean energy, semiconductors, and advanced mobility. For Israel and global investors, the shift could change the calculus: U.S. firms may become more cautious, partnerships more selective, and funding harder to secure.

Looking ahead, stakeholders will closely watch whether these proposals survive congressional negotiation and whether rollback decisions are retroactive or phased. Key next steps include DOE issuing a formal rollback list, recipient appeals, and legislative pushback. Risks abound: public backlash, political pressure from affected states, and disruption to project pipelines. For energy, automotive, and startup sectors alike, the evolving funding landscape may rewrite which technologies and firms prevail in the U.S. race for industrial leadership.