The future for EVs in America looks grim. But the auto industry isn’t giving up

By Chris Isidore, CNN

(CNN) — Just a couple of years ago, America’s auto industry had visions of an all-electric future. It has since abandoned that talk after the Trump administration eliminated the federal government’s incentives for the technology.

The near future isn’t looking too pretty. The end of the $7,500 federal tax credit for EVs is expected to send sales plunging in the coming quarters and perhaps years.

But the global auto industry hasn’t given up entirely on EVs. Automakers are continuing to invest in an electric future — even if it’s not all-electric, as they had expected. The auto industry remains uncertain about the regulatory future of gas-powered cars in large parts of the United States as well as other markets around the globe. And they don’t want to fall too far behind China’s massive EV surge.

“They have softened their stance on an all-EV future,” said Daniel Ives, tech analyst for Wedbush Securities. “I do believe Ford, GM, Stellantis, and a lot of other automakers will still aggressively go down the EV path. But they’re more carefully going down the path than they were a few years ago.”

Sharply lower US EV sales ahead

The end of a $7,500 federal tax credit a week ago caused an EV sales surge during the third quarter as interested buyers rushed to grab a car before the discount expired. Tesla (TSLA), Ford (F), and General Motors (GM) all sold more electric cars than they ever had before, with GM in particular selling more than double the number of EVs in America than it had a year earlier. Tesla’s sales jump came after six straight months of declining numbers.

But after the sharp rise, EV sales for the rest of the year will likely come back to Earth with a heavy thud. And it’s unlikely they’ll get back up for a long time afterwards.

While a full 10% of all cars sold in the US in the last quarter were electric, Ford CEO Jim Farley said last month that he expects EV sales to fall to 5% of the US market, which would be down from about 7% of the market last year. General Motors CFO Paul Jacobson said that his company also expects that “EV demand is going to drop off pretty precipitously.”

Still placing big bets

But despite the gloomy outlook, Ford announced in August a $5 billion investment in EV production, a move it called its “next Model T moment,” a reference to the Ford car that helped introduce internal combustion vehicles to the mass market more than a century ago.

“I think it’s going to be a vibrant industry, but it’s going to be smaller, way smaller than we thought, especially with the policy change,” Farley said at a recent company event.

Hyundai, also said it is not pulling back from its EV investment plans in the US market, even after immigration officials arrested 475 workers at one of its new EV and battery plants under construction in Georgia.

But Hyundai CEO José Muñoz stressed at a recent investor day event that the plant will be able to shift between building EVs and traditional gasoline powered cars more easily depending on market demand is part of the comapny’s plan.

Changing emissions regulations

Part of what forced automakers to shift to electric vehicles in the first place had been federal regulations from the Biden administration that aimed for EVs to make up 50% of the American new car market by 2030, and would have imposed steep penalties on automakers that didn’t hit the target.

Those regulations have been mostly rolled back under the Trump administration. The steep financial penalties for violating emission limits were also eliminated in the July tax and spending bill passed by Republicans in July.

California and eight other states – Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington – had also imposed mandates that would have essentially banned the sale of on gasoline-powered vehicles by 2035. Between them, those states account for about a quarter of US car sales.

But Congress recently moved to end California and the other states’ abilities to impose their own, stricter, emissions rules. That fight has been taken to federal court, and the battle could take considerable time to resolve – so much time that changes in administrations in the next decade could ultimately bring that ban back into place as soon as 2035. Europe and China are also moving ahead with their own stricter emissions rules that could force electric vehicle purchases.

Automakers were also chasing much higher stock prices with their EV plans. Tesla has a greater market cap by far than any other automaker, even though it sells only a fraction of the cars any of them do. That has been the case for years, even before CEO Elon Musk and the company’s fans on Wall Street started talking about its ambitious-but-yet-to-be-realized plans about robotaxis and robots driving up the value of the company in the future.

Gas cars ‘no longer a four-letter word’

Rather than going all-in on all-electric cars, automakers are focusing on hybrid–vehicles that have both electric motors and internal combustion engines (ICE).

“There’s still an aggressive push for EVs. But ICE is no longer a four-letter word anymore,” Ives said. “They’re going back to their roots.”

And America’s car companies are saying they didn’t see the same market demand for all-electric vehicles as cars powered by gasoline.

The regulations that had been in place under the Biden administration were “putting us in a box that would have ultimately resulted in a significantly smaller US auto industry, because we wouldn’t have been permitted to sell the internal combustion vehicles at anywhere near the volume we would have sold them,” GM CFO Jacobson said at GM’s investors presentation last month.

He said that, despite those regulations and support for EVs, including the $7,500 tax credit, “customers weren’t adopting at the rate that the government wanted.”

But Jacobson said GM still sees longer-term growth in demand for EVs, even without the tax credit and other support for an all-electric future, and that the company is working to meet that growing EV demand.

“We need to let it settle and understand where is that natural (EV) demand going forward and how do we meet that natural demand,” he said. “That’s going to take a little bit of time. We’ll probably have to adjust our footprint a little bit.”

EVs remain attractive

Automakers also find EVs attractive for competitive reasons: It takes fewer hours of labor to produce an EV than it does a gasoline powered car – with its complicated engine and transmission – making them potentially more profitable for automakers than traditional gasoline powered cars.

And demand for EVs could start to increase again if the cost of producing EVs, especially the batteries that make up a large part of the cost of electric vehicles, continues to drop. And virtually every automaker is announcing plans for less costly battery technology.

As part of its $5 billion EV investment plan announced last month, Ford said it will soon sell an EV pickup for $30,000, making it one of the most affordable available. By comparison, the Ford F-150 Lightning pickup has a starting price of about $55,000. The new line to build that more affordable EV pickup is due to be up and running by 2027, Ford said last month.

And Ford still thinks the world is changing, even if it’s changing more slowly than people originally thought.

“We took inspiration from the Model T — the universal car that changed the world,” Doug Field, Ford’s chief EV digital and design officer, said Monday. “We think today will be a turning point for Ford Motor Company and the auto industry.”

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.