Automotive OEMs Adjust EV Strategies 2025-30

The advance of EVs is globally undeniable, with countries like Norway reaching 89% of new car sales, China at 41%, and globally reaching 17% in 2024. Even in the USA, where politics has mixed heavily with vehicle propulsion, new car sales of EVs crossed 8% in 2024, and 20% if you count hybrids. Trend lines make predicting the future easy.?

The cost per EV is dropping, battery costs are dropping, charging infrastructure is being deployed that makes ownership easier, quality is rising, competition is rising, and the features offered by these new cars are also increasing. EVs sales, as a share of new cars sold, WILL continue to grow…now the question is just how fast. Automakers must ponder that question as they lay out their product roadmaps for the next half-decade. How consequential will the comeback victory of Donald Trump be for auto OEMs?

President Trump's recent executive orders have prompted automakers to reassess their strategies and publicly address their plans for the future of electric mobility. This article examines how both US and foreign car manufacturers are responding to the evolving landscape of EV policies in the United States.

Where the Biden Administration had more carrot, the Trump administration is more stick…but both share a common objective to localise more of auto production domestically in the US. OEMs can thus continue some of their onshoring efforts which began because of subsidies and shall continue to avoid tariffs (both of which end up being paid by the US consumer, and can be considered a forced investment in domestic manufacturing.)

Big Changes by POTUS 47 Week One

Only a week after taking over the White House, and a month in Congress, Republican lawmakers have wasted no time in implementing policy changes aimed at reshaping the electric vehicle market in the United States. These changes represent a significant departure from the previous administration's focus on promoting EV adoption and have generated uncertainty about the future direction of the US EV market.

• One of the most notable changes is the administration's stance on the non-binding target set by the previous administration, which aimed for 50% of new vehicle sales to be electric by 2030. While President Trump cannot simply "revoke" a non-binding target, he has taken steps to dismantle policies related to this goal and signaled a shift away from government-led initiatives to promote EVs. I think that this change is more symbolic than effective, since it was already non-binding, and most carmakers were agreeable to it since it came with incentives, and was not so different to their product roadmaps.
• The new administration has called for a review of emissions rules established under former President Biden, potentially easing regulations for automakers. This move could benefit gas-powered vehicles by reducing the pressure on automakers to meet stricter emissions standards. This will certainly increase the share of gas cars made and sold.
• Another significant policy change is the pause on the distribution of federal funding for EV charging infrastructure (NEVI). NEVI got off to an embarrassingly slow start because of red tape and grid-tie delays in rolling out new charging stations, but was just starting to hit stride. This decision will hinder the expansion of the nation's charging network. I believe this will slow down EV adoption by making it less convenient for consumers to charge their vehicles. This public charging hurdle is the current Achille’s Heel of EVs.

Wildcard: Tariffs

100%? 0%? 25%? Nobody really seems to know what’s in store. Currently, President Trump is considering imposing a 25% tariff on vehicles imported from Canada and Mexico, but the numbers vary and move around for any given nation. The tariff will have significant ramifications for all automakers, particularly those with production facilities in these former NAFTA countries, such as Toyota and Stellantis.

These policy changes have created a dynamic and uncertain landscape for the automotive and EV markets in the United States. Automakers are now carefully assessing the potential impact of these changes on their strategies and making adjustments to ensure their continued competitiveness in the evolving market. But that’s nearly impossible because there is too much uncertainty. After week one, it’s starting to seem that Trump’s very high tariff threats were more of a negotiation strategy than fact. But nobody thinks the 2024 status quo will last. The industry (and trading partner nations) are expecting increased tariffs at some level, and are buttressing their expectations accordingly.

What will the carmakers do? For now, lobby and negotiate manageable tariffs as they continue to domesticate as much EV production as they can in order to avoid the tax.

Changes in EV Sales and Production

Despite the policy uncertainty, the US EV market continues to grow, albeit at a slower pace than in previous years. In 2024, EV sales topped 1.3 million units, a 7.3% year-over-year increase. This growth was driven by strong incentives from automakers, favorable lease deals, and federal and state programs. However, the pace of growth slowed compared to 2023, when EV sales surged by 49%.

Several factors contributed to this slowdown, including a nagging lack of lower price EV models (the kind that are readily available in other countries) and lingering concerns over charging infrastructure. However, the market picked up at the end of the year, with EV sales growing by 15% year-over-year in the fourth quarter. This surge was partly attributed to consumers rushing to lock in EV tax credits before potential policy changes under the new administration.

On the production side, automakers are adapting their manufacturing facilities to accommodate the growing demand for EVs. Many are reconfiguring existing plants to produce a mix of ICE vehicles, hybrids, and EVs, while also investing in new battery plants to support their electrification efforts. This shift in production reflects the industry's recognition of the long-term trend towards electric mobility, even as policy changes and market uncertainties create challenges in the near term. And, importantly, these renovated factories are taking advantages of lessons in lower-cost production learned from Tesla and China, which will help reduce the prices of EVs, while still protecting margins.

Mostly located in “Red States”, these manufacturing plants are the darlings of R state governors, senators, and congressional representatives. They represent local jobs and strengthen the economies. There is NOT a lot of appetite in Congress, on either side of the aisle, to throw a boot into the works here.

The Growing EV Ecosystem

In addition to new models, the auto industry and private equity are also investing in advanced EV technologies to enhance the efficiency, range, and sustainability of electric vehicles. Some of the key technological advancements include:

• Smart Charging Solutions: Companies like ChargePoint, EVBox, and Shell Recharge Solutions are leading the way in developing smart charging solutions that optimize charging times, manage grid loads, and integrate with renewable energy sources.
• Improved Battery Recycling: Advancements in battery recycling technology are making it possible to repurpose used EV batteries for other applications, such as energy storage systems, extending their useful life and reducing environmental impact.
• Use of Recyclable Energy Sources: Automakers are increasingly exploring the use of renewable energy sources, such as solar power, in both the manufacturing process and charging infrastructure for EVs.

These innovations are crucial for addressing some of the key challenges associated with EV adoption, such as range anxiety, charging time, and environmental concerns. By continuing to invest in new models and technologies, automakers are demonstrating their commitment to the future of electric mobility, even as policy changes create uncertainty in the market.

So for 2025, the US EV market will become increasingly competitive, with a diverse range of models available from both established and emerging automakers. Tesla begins the year as the dominant player, but its market share has declined as other automakers, such as General Motors, Ford, and Hyundai, have increased their EV sales.

Trump’s policies will slow down EV adoption, but there are just too many trends (and influential groups) supporting EV growth. Basically, I see the EV progression like a viking ship sailing downriver. It’s moving swiftly because many different forces are all pushing it the same direction: rowers, sails, and current. The Trump administration can certainly take the wind out of the sails, but the efforts of the rowers will still steer the ship, and the underlying currents will still carry it forward.

So…What Do OEMs Do?

How will auto OEMs EV strategies change under Trump? The shortest answer, despite some significant policy shifts, is: “Not much.”

Although policy shifts in the United States have created a complex and dynamic landscape for the electric vehicle market; and the rollback of federal support and potential easing of regulations may create uncertainty and challenges in the near term, automakers are adapting their EV strategies to navigate this evolving environment. Many remain committed to their electrification goals, focusing on key segments, developing new models and technologies, and exploring partnerships to maintain their competitiveness.

As much as the USA is an important market for the auto industry, it is still just a subset of the wider global market, where the trend towards EVs is much harder to staunch. US carmakers are aware that their global competitiveness is dependent on having a competitive EV offering as well as whatever hybrid and ICE cars they may continue to produce. Domestic EV sales help them reach scale economies, which in turn will help their global competitiveness. US automakers may not be doing great, globally, in EVs, but they are no longer oblivious to the threat/opportunity. Just look at Ford CEO Jim Farley, who personally drives an Xiaomi SU7. While some have criticized this, I think it’s an important example of removing the blindfold so you can see the target. (Steve Ballmer famously made fun of the iPhone, saying people would prefer the Windows phone. Like Farley, Ballmer should have bought and used an iPhone instead.)

The long-term impact of these policy changes remains to be seen, but the automotive industry's continued innovation and investment in electric mobility suggest that the transition to EVs is likely to persist, albeit potentially at a more measured pace. The US EV market is poised for continued growth, driven by factors such as state-level initiatives, consumer demand, and technological advancements. However, the future of electric mobility in the US will depend on how effectively automakers and policymakers can address the challenges and capitalize on the opportunities presented by this evolving landscape.