US Electric Car Uptake Will Slow Further on Trump Policies

Already sluggish adoption of electric vehicles in the US will slow even further after a $7,500 tax credit for EV buyers expires later this month.

Battery-powered cars will account for half of US auto sales in 2039, five years later than previously predicted, according to a new forecast by EY, a unit of consultant Ernst & Young Global. Growth in EV sales will barely budge this decade, reaching 11% of the US market by 2029 compared with 8.1% last year, EY said in a study released Monday.

The forecast is the latest to highlight how policies championed by President Donald Trump are expected to turn the US into a global EV laggard.

Trump vowed to terminate what he called EV mandates as he campaigned to secure a second term in the White House. He directed federal agencies to roll back ambitious emissions and fuel economy regulations, while his $3.4 trillion fiscal package eliminated financial penalties on automakers for not meeting those standards and cancels the $7,500 consumer tax credit for EV purchases on Sept. 30.

EY predicts those actions will make EVs an even harder sell to American car buyers, who already were turned off by high prices and spotty charging infrastructure for battery powered cars.

Automakers have curtailed multi-billion dollar bets on the technology that they made earlier this decade, when they expected battery powered models to account for as much as half of sales by 2030.

Now, carmakers are shifting resources back to traditional gasoline-fueled vehicles and slamming the brakes on EV production.

General Motors Co. last week cut production at two EV factories, citing slower customer demand. Ford Motor Co. Chief Executive Officer Jim Farley recently told analysts the automaker is reducing EV spending “pretty massively,” despite revealing plans for a new line of affordable EV models.

Easing regulatory policies, high costs, and infrastructure gaps are all working to drive down EV adoption in the US, Constantin M. Gall, global mobility leader for EY, said in an interview.

The delay in EV adoption will leave the US years behind China and Europe. EY sees battery-electric vehicles surpassing half the market in China in 2033 and topping 70% of sales there by 2039.

In Europe, EY forecasts that more than half of new vehicle sales by 2032 will be battery-electric, seven years before the US. EY anticipates stricter climate regulations and more generous consumer incentives will propel EV uptake in Europe and China.

“The penalty regime is quite a different one” in Europe and China, compared to the US, Gall said in an interview. “You will have way stricter regulatory environments in many of these countries that are being enforced either by taxing the private ownership of vehicles or taxing the” automakers.

The switch back to internal combustion engine vehicles has the potential to leave American automakers behind in the race to cleaner mobility, which EY sees dominating the global auto market by mid-century, Gall said.

“If you currently re-emphasize the legacy, traditional portfolio, then you will slow down” spending on EVs, Gall said. “This will have repercussions on how you are positioned three years, four years, five years down the road.”

A separate forecast Monday from researcher iSeeCars predicted EV market share in the US will fall by half — to roughly 4% — in 2026 through 2028 due to the elimination of federal incentives and regulatory rollbacks.

“With the $7,500 EV incentive ending on Sept. 30, we’ve hit peak electric vehicle sales and market share in the US — at least for the next few years,” Karl Brauer, executive analyst for iSeeCars, said in a statement.

“There will be a substantial drop in electric vehicle production, sales and market share” starting in the fourth quarter of this year, he said.

Photo: An electric vehicle charges. Photographer: Angus Mordant/Bloomberg

Topics USA Auto