Electric Vehicle (EV) industry leaders and experts have warned that the US might fall further behind China in the global electric vehicle market, citing the Trump administration’s support for gasoline engines as the primary cause of a significant decline in EV investments.
According to their analysis, since Donald Trump resumed office in January, he excluded tax benefits for EV buyers from consideration. He advocated for the elimination of regulations on greenhouse gas emissions.
This action marks a shift from the Biden administration’s supportive approach towards the industry.
The US automotive industry faces a significant crisis
The US Clean Investment Monitor, a database created by Rhodium Group and MIT, shared data highlighting a sharp decline in E-related investments of almost a third, to $8.1 billion in the three months preceding September, compared to the same period last year in the country. Examples of electric vehicle-related investments include batteries, vehicle assembly, and charging equipment.
The data also revealed that approximately $7 billion of planned EV investments were canceled from April to September. This situation prompted industry leaders and experts to investigate the root cause of the problem.
While researching, they discovered that the decrease in US support might significantly impact the industry in the coming years. Based on their argument, this might benefit China in the EV competition and establish uncertainty in the EU regarding its plan to ban the sale of internal combustion engine vehicles by 2035.
Håkan Samuelsson, CEO of Volvo Cars, weighed in on the topic of discussion. Samuelsson urged the US to accelerate their development process in EVs to keep up with China. According to the CEO, weakening these signals could hinder progress due to changes from the White House.
Considering the intense nature of the situation, some European car manufacturers have stepped up their efforts to urge Brussels, the de facto capital of the European Union, to ease its ban on gasoline engines, allowing for the sale of vehicles like plug-in hybrids after 2035.
Meanwhile, in contrast to the Biden administration’s supportive approach to electric vehicles, Trump has cautioned that electric vehicles could significantly harm the US automotive industry and lead to price hikes for consumers. This change in Washington has spurred unfavorable forecasts for EV sales in the US.
An example of these predictions is AlixPartners’ forecast, which highlights that fully electric vehicles are expected to account for 7% of US car sales in 2026. Notably, this is about half of what the consultancy had earlier predicted. They also pointed out that hybrids will represent 22%, internal combustion engines (ICEs) will make up 68%, and plug-in hybrids will account for 3%.
China plays a crucial role in the global auto sales
Reports indicate that the Trump administration has reduced government support for the car industry, particularly the EV sector. This has created a trade war, causing problems for electric vehicle buyers and manufacturers.
Consequently, demand for these vehicles has drastically decreased, and manufacturers are beginning to reduce the number of EVs they produce.
Regarding the situation, General Motors announced this month that it is expecting a $1.6 billion loss in its quarterly earnings due to the decrease in value of its EV operations.
Some manufacturers have adopted new strategies to tackle this issue. To support this claim, Ford’s CEO, Jim Farley, stated that the company will focus on partial electrification rather than fully electric vehicles.
Interestingly, this is not the situation in the global market. Market research firm Rho Motion revealed that global electric vehicle sales reached their highest record of approximately 2.1 million in September. According to the firm, this record was partly due to US buyers racing to purchase electric vehicles before a tax credit expired.
Moreover, this milestone has been credited to the robust demand in China, with Chinese buyers accounting for about two-thirds of global sales. With this sales record, it is worth noting that September is often referred to as the “golden month” for auto sales in China, where carmakers typically release new models during this period.
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Source: https://www.cryptopolitan.com/us-faces-setback-in-ev-race/
