Regulatory changes have led to car makers writing off the equivalent of almost $40 billion in EV investments
Car makers in the US have written off the equivalent of almost $40 billion in EV investments following regulatory changes that ended mandatory sales of EVs. However, a desire to compete globally and the need to comply with state laws means the big players aren’t giving up on electric power.
The US had been largely following Europe and China in pivoting towards EVs, pushed in part by government regulations put in place by president Joe Biden that required EVs to account for half of light vehicle sales by 2030.
Those regulations have now been revoked by president Donald Trump, allowing a wholesale return to non-electrified combustion engines and even spelling the end of emissions-saving technology such as stop-start systems.
Such is Trump’s desire to overturn all legislation linked to what he calls the “green new scam” of climate change that he ordered the Environmental Protection Agency (EPA) to end the so-called endangerment finding, dating back to 2009, that enshrined the danger posed by rising CO2 levels and underpinned the CAFE (corporate average fuel economy) targets.
The difficulty now for American car makers like Ford, General Motors and Stellantis is working out how to rid themselves of expensive EV programmes that no longer have government support while gauging future EV demand and complying with existing state legislation on emissions, led by California.
There’s also the chance that the EPA ruling might be overturned in court, much like some of Trump’s tariffs recently were (although not those on cars).
Plus there’s the medium-term headache of guessing what a future federal government, possibly led by Democrats, might impose.
“We saw CAFE get zeroed out last year and we took a charge for that. The EPA just ruled overturned the endangerment finding. We know that. Now we still have the federal versus the state,” GM finance chief Paul Jacobson said at a Citibank conference last month. “That’s another reason not to really abandon EVs, because we might see that change again.”
A change in government doesn’t traditionally alter much within car companies, but Jacobson likened Trump’s election to a global shock like the Covid pandemic or the subsequent chip shortage in that it tore apart long-term planning both on production (via the new tariffs) and EVs that ultimately ended up costing billions.
GM was gearing up to sell around a million EVs annually by 2030 to hit the regulation, Jacobson said. After Trump killed that requirement, the company in January wrote off investment totalling $6bn.
Jacobson explained: “The bulk of the write-off was going in and saying ‘okay, we know that the demand curve is going to be much flatter; it’s still going to grow, but it’s not going to be growing to 50% by 2030’.” He estimated medium-term demand at between 5% and 10%.
Last year the US EV market hit 1.27 million, accounting for 7.8% of the total vehicle market – the second highest share on record, according to data firm Cox Automotive. However, that was less than half the EV sales share in Europe.
The reason 2025 wasn’t a record year, said Jacobson, was the US government’s decision to yank away the $7500 tax credit in the third quarter, causing sales to tank by 36% in the fourth quarter.
Tesla remains the dominant EV player in the US, with its sales accounting for almost half the market total last year. GM was next, with just over 150,000 sales. Its Chevrolet Equinox SUV was the third most popular EV after Tesla’s Model Y and Model 3, with 57,945 sales.
The big driver was California, the US’s biggest market for EVs. The state’s EV share last year was closer to Europe’s, at 19%. Had it been in Europe, its 378,216 EV sales would have slotted it behind Germany and the UK in third place.
California has long driven the US’s CO2-based emissions regulations, set up in response to rising smog levels. Indeed, state laws require 100% of all car and pick-up truck sales to be electric in 2035. The phased approach starts this year with a requirement of 36% EVs. Eleven other US states have adopted the same policy.
The Trump administration, meanwhile, is trying to kill the waiver that allows California to set its own emissions regulations, setting up a legal battle that will further keep car makers in limbo.
However, California’s emissions rules have long outpaced the automotive industry in terms of EV development, and it has had to reset its targets previously.
For car makers, the big change is the killing of Biden’s federal requirement for 2035, prompting them to axe a wide range of electric models.
Ford killed its F-150 Lightning pick-up and two versions of a planned seven-seat large SUV.
GM said goodbye to its Brightdrop van and reversed a plan to build pick-ups at a plant near Detroit. It will also kill the Mk2 Chevrolet Bolt crossover after just 18 months in production.
Stellantis is also out of the electric pick-up game after axing a planned EV version of the Ram 1500. It has also dropped its plug-in hybrid models.
PHEVs have been talked about as a potential bridge technology in the US but last year accounted for only 3.5% of sales, according to Cox Automotive.
Meanwhile, Honda has backed out of a deal to hook up with GM on EVs and Volkswagen has reportedly delayed the launch of the Scout 4×4 brand, with its electric and range-extender SUV and pick-up.
Car makers have said that regulations weren’t allied to customer demand for their EVs. But they also admit that the technology was wrong for the mostly large vehicles to which they initially applied it.
“[For] large trucks, where towing is a real important application, both PHEV and pure-electric will definitely not work,” Ford CEO Jim Farley said on the company’s earnings call last month.
Ford instead shifted to the smaller truck and SUV market and plans to launch the first model based on its new Universal EV (UEV) platform in 2027 with a targeted price of between $30,000 and $35,000.
“We aren’t just building compliance vehicles at Ford,” Farley said. “We’re launching a cost-efficient, universal EV platform that will drive profitable growth in the lower price segments, where the EVs have continued to thrive in America.”
The UEV platform utilises many of the technology leaps made by Tesla and Chinese companies that have kept costs down, including lithium-iron-phosphate (LFP) battery chemistry, cell-to-body construction and ‘megacast’ aluminium sub-assemblies replacing the equivalent of 146 parts.
Ford has long sought to compete with new entrants on costs and slow losses at its EV-focused Model E division, which last year was $4.8bn in the red, due to the costs of building the Mustang Mach-E and its European EVs, including the Explorer and Puma Gen-E.
The difficult part for American car makers is working out how to balance the investment needed for new EVs and establishing a supply chain without help from a government that not only doesn’t support EVs but actively discourages them. “We need scale, right?,” said Jacobson. “That’s going to take a little bit of time.”
Ford meanwhile is syphoning off some of its excess battery supply into a new division called Ford Energy that sells LFP batteries for energy storage. The strategy “diversifies our revenue and derisks the core automotive business”, Farley said.
America’s electric-only car makers – Tesla, Lucid and Rivian – will meanwhile continue to generate organic EV demand, even if Tesla is now more focused on autonomous robotaxis rather than personal transport.
But the reality is that under Trump the US is shifting from being the cradle of mainstream EV development with Tesla at its heart to becoming a bit-part regional player, with China the new global driver.
