A Short-Sighted, $27 Billion EV Retreat |
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The Trump administration’s elimination of tax credits for electric vehicle purchases had the predicted effect in the final quarter of 2025, triggering a 36% drop for the segment after a spike in the third-quarter as Americans raced to grab the $7,500 incentive before it vanished. As a result, full-year EV sales dropped 2% to 1.275 million from a record 1.3 million in 2024, according to Cox Automotive.
The outlook for battery-powered vehicles in the U.S. this year isn’t much better, with London-based forecaster Benchmark Minerals Intelligence anticipating a further 29% drop. But that weakness isn’t the story worldwide. In fact, global EV sales could jump nearly 16% this year to 23.9 million units, with China growing about 20% and Europe rising by 14%.
Against the domestic downturn, General Motors and Ford have announced huge shifts in their strategy and are taking big writedowns as a result: Ford booked a $19.5 billion charge last year and cancelled its electric F-150 Lightning pickup. GM has so far said it’s taking charges of at least $7.6 billion to scale back its battery and EV production plans, a big reversal from steady investments in recent years.
GM’s shift is particularly surprising since it quietly became the second-biggest EV seller in the U.S. last year, delivering nearly 170,000 models through its Chevrolet, Cadillac and GMC brands, a company record and 48% annual increase. Only Tesla, which posted a 7% U.S. drop in 2025, sold more. And with that brand growing increasingly toxic in California, the top U.S. EV buyer, because of CEO Elon Musk’s strident political and social views, there’s certainly an opportunity for GM, with affordable models like its Equinox EV and revamped Bolt hatchback, to grab more market share.
The $27 billion of cuts by Ford and GM, pivoting to increased sales of big, gasoline-powered SUVs and pickups, perhaps make short-term economic sense, but looks short-sighted and out of step with the direction the world is heading. China is already the leading maker and buyer of EVs – consumer sales there were 10 times those in the U.S. – and it’s finding more opportunities in both developing and advanced markets eager for its affordable products.........