EV Outlook Sinks as US Withdraws Policy Support Amid Rising Trade Barriers

The global outlook for electric vehicle (EV) demand has been revised downward for the second consecutive year, largely driven by the withdrawal of policy support in the United States and escalating global trade barriers. According to the latest report from BloombergNEF (BNEF), long-term expectations, especially for the U.S. market, are experiencing a significant downgrade. This situation is compelling automakers to re-evaluate their EV strategies and scale back production plans.

Several critical policy adjustments are behind this slowdown in the U.S. The expiration of the $7,500 federal tax credit for EV buyers, the easing of fuel economy standards, and efforts to limit California's ability to set its own emissions rules have collectively reduced the regulatory impetus that previously fueled EV demand. The Trump administration and Republican lawmakers have largely dismantled Biden-era EV mandates and incentives, further contributing to this decline.

These policy changes have led to substantial revisions in market expectations. BNEF now projects that EV sales in the U.S. will account for only 17% of passenger vehicle sales by 2030, a sharp decrease from last year's forecast of 27% and the initial 2024 projection of 48%. This revision implies a cumulative loss of approximately 14 million EV sales in the U.S. through 2030. Furthermore, the global battery demand outlook has been cut by about 8% (3.4 terawatt-hours) between 2025 and 2035.

Automakers are consequently being forced to adapt to these new conditions. Major players such as Stellantis (STLA), Ford (F), General Motors (GM), and Honda (HMC) are scaling back their EV ambitions, having reduced, delayed, or canceled the production of at least 27 existing and future models. These companies have reported collective EV-related losses totaling around $64 billion. Some manufacturers have begun shifting their production back towards gasoline-powered or hybrid vehicles in response to evolving consumer demand.

Examining the broader economic and political context, tariffs imposed by the Trump administration and rising global trade barriers are also adversely affecting automakers' ability to sell EVs competitively. While China remains the dominant global EV market, its growth rate is also expected to decelerate due to changes in its subsidy programs. In contrast, Europe is experiencing robust growth in EV sales, and emerging markets, including Southeast Asia and Latin America, are witnessing rapid expansion, partly driven by the influx of affordable Chinese-made EVs.

Market analysts and expectations suggest a more modest growth trajectory for the U.S. EV market in the near term. However, the long-term trend towards electrification is anticipated to continue, driven by improving vehicle economics and falling battery prices. Nevertheless, the point at which battery-electric vehicles achieve cost parity with conventional cars has been pushed further out, now expected around 2039. This indicates that the automotive sector will face significant challenges in adapting to both technological innovations and shifting policy and consumer demands in the coming period.