The U.S. auto industry faces a triple threat on the road to cleaner cars and trucks: lagging consumer demand for electric vehicles, a potential glut of cheap electric vehicles from China and the possible rollback of Biden administration moves if Donald Trump becomes president again.
All of that is raising questions about whether the EV revolution in the United States could end before it really begins, especially if a victorious Trump follows through on promises to rescind regulations and financial incentives for zero-emission vehicles.
Still, many industry analysts are confident the transition will continue even in a new Republican administration because so many billions of dollars have been invested and the global market is shifting rapidly toward EVs in response to climate change.
A slower pace for EVs in America would further the lead for China, which dominates the global market at 60 percent of worldwide EV sales, according to the International Energy Agency.
“If we don’t continue to incentivize both the purchase of the vehicles domestically and the creation of the infrastructure, the charging stations, we run the risk of falling behind in the technology,” said Alan Taub, a former auto executive who now heads the Electric Vehicle Center at the University of Michigan.
The stakes are too high to let that happen, said Ellen Hughes-Cromwick, senior resident fellow in the climate and energy program at the left-center think tank Third Way and a former chief economist at both Ford Motor Co. and the U.S. Department of Commerce. She noted that there are 4 million jobs in the U.S. auto industry and the local economic impact of workers who make around $100,000 a year is enormous.
“What’s going to happen if the politics shifts to Republicans after November? Are they going to say, ‘OK, [China] can have our auto industry?’ Who’s going to want to see the industry move?” Hughes-Cromwick said.
Trump has made clear his animosity toward EVs, telling advocates for the technology to “ROT IN HELL” in a Christmas message on Truth Social. This month he told oil executives that he would end the EV transition and asked them to donate $1 billion to his presidential campaign, according to The Washington Post.
The message from Trump is ominous, said Troy Stangarone, senior director and fellow at the Korea Economic Institute, a Washington-based organization promoting U.S. ties to South Korea, which shipped more than 1.2 million vehicles to the U.S. in 2023.
“The most likely outcome of a Trump presidency would be to slow or stall a transition to EVs in the United States,” Stangarone said via email. “There is a clear strategy by China to become the global leader in EVs and EV battery technology and the Trump campaign’s approach to this would only help China expand its lead on the United States.”
Scott Paul, president of industry nonprofit Alliance for American Manufacturing, said in an interview that major disruptions in the EV transition could also further empower China’s dominance over the U.S. in the EV supply chain.
“What concerns me about the politicization of this and what Trump has said is that — yeah, he doesn’t like cars coming from China, but he’s perfectly willing to let those companies come into the United States and set up operations, which, in so many ways, would be even worse,” Paul said.
The Biden administration announced last week it will hike tariff rates on Chinese EVs and batteries, which Paul called an important move to provide U.S. automakers more market certainty. But Chinese-owned and -affiliated auto companies have taken to setting up shop in Mexico, creating concern that Chinese autos could enter the North American market via that country.
“Because of all the state support and state connections that [Chinese automakers] have, it’s just not a level playing field,” Paul added.
Election year pause?
There have been few announcements of new EV plans by automakers this year, leading to some speculation that companies are pausing their efforts until the outcome of the election is known.
“While companies are committed to the transition, they are definitely slowing investment,” said Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis, in an email. “They are counting on an easing of policies — such as the 100% tariff imposed today on Chinese EVs. It’s a risky strategy, which could backfire on them if Trump is not elected.”
Another industry expert, David L. Greene of the Department of Civil and Environmental Engineering at the University of Tennessee, said EV sales are slowing down in the U.S. and Europe amid consumer concerns about the cost and reliability of the vehicles.
“There’s a lot of unfamiliarity with the technology, even a certain amount of misinformation,” he said. “Where do I charge? Do charging stations work? And there’s the cost problem.”
Frank Maisano, senior principal with a focus on energy and environment at law firm Bracewell LLP, added that many automakers have already built out the bulk of their investments in EVs. There are plenty of cars on the lot, he said, but they’re not selling as fast as the manufacturers thought they would.
The supply-and-demand trends for EVs happen to fall on an election year where there’s uncertainty about policy, Maisano said, and so it’s in automakers’ best interest to “slow down and see what happens.”
“Consumers are not all-in yet on this,” he said. “Electric vehicles are not going away. But there are still lots of other questions that have to be addressed.”
As far as a slowdown by the auto companies in the face of a possible policy shift in Washington, Greene said that is to be expected. “Manufacturers have always hedged to some extent,” he said. “That doesn’t mean they’re not really committed to transitioning to electric drive. I think they are because they’re global manufacturers.”
Rep. Debbie Dingell, D-Mich., said in an interview last week that Congress and the administration still need to provide U.S. automakers certainty of federal support, especially as the automakers are vying to compete in a global marketplace. She added that the Biden administration has provided certainty in its actions and regulations.
“Let’s hope they have the certainty they need and we don’t have to get into a legislative battle,” she said.
But Maisano said legislation may be one of the better paths to provide that certainty, like the 2021 infrastructure law, which provided investments in EV charging infrastructure and other transition needs.
“Unfortunately, in an election year, Congress and the administration who are all on the ballot are just not brave enough to make that effort,” Maisano said.
Hughes-Cromwick said it would be imprudent for automakers to change long-term strategies during an election year. “If I ever heard in an automotive company that they’re going to alter their capital plan based on a political cycle, I’d say you’ve got a problem,” she said.
Shift to hybrids
There has been some shift in strategy in response to the slowing demand for EVs. Ford and General Motors Co., for example, have said they plan to offer more hybrid gas-and-electric vehicles that come with fewer concerns about range. Ford also scaled back production of the all-electric F-150 Lightning in April after sales in 2023 were below expectations.
Stellantis, parent company of Chrysler and Jeep brands, remains fully committed to the EV transition, though spending could rise or fall depending on who gets elected in November, according to CEO Carlos Tavares. “I have no scenario for the fact that it would stop, because we need to fix the global warming issue,” he told reporters in January.
The uncertainty in the industry is reflected in the wide range of consumer views of EVs in America.
Matthew Fisher, CEO of Gridspot, told USA Today in March that he was stunned by the response when he advertised his company’s app allowing owners of EV chargers to rent them out to other drivers in their neighborhood. What he heard was a lot of vitriol about EVs.
“It was just this sentiment that ‘you take my emissions, you take my freedom,'” Fisher said. “It’s mind-boggling.”
At the other end of the spectrum, the University of Michigan’s Taub said he recently was on a panel on EV technology in Detroit, and at the end he told the audience of auto executives and engineers that “it’s time to rebrand the Motor City the E-Motor City.”
“It was the only time I have ever given a presentation where I got a standing ovation,” Taub said. “A few weeks later I tried it again and the same thing happened.”
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