Electric vehicles have clearly lost momentum in the United States. And combustion engine cars and trucks are enjoying a renaissance to the dismay of environmentalists who worry about air pollution and greenhouse gases.
But there’s reason to believe that electric vehicles will remain a significant part of the U.S. car market and that sales of these models will eventually grow again in the coming months.
Electric vehicles from Tesla and some other automakers are less vulnerable to President Donald Trump’s tariffs than many conventional cars because more of their parts are made in the United States. Advocacy groups are conducting marketing campaigns to emphasize the lower fuel costs and other advantages of electric vehicles. And automakers appear to realize that they cannot give up on electric cars if they hope to remain competitive globally.
Washington has become hostile to electric cars.
Government policy on electric vehicles has reversed since Trump was elected. For consumers, the most visible change is the elimination of tax credits of up to $7,500 for electric vehicle purchases and leases. The credits, which have existed in various forms since the early 2000s and were revived by Democrats when Joe Biden was president, will now expire at the end of September under the big policy and tax law that Trump signed in July. The president in June described the federal incentives for electric vehicles as a “mandate that forced everyone to buy electric cars that nobody wanted.” The Biden administration’s goal was for half of new car sales to be electric by the beginning of the next decade, meaning it would still have been easy to buy a gasoline car.
Analysts expect a spike in electric vehicle sales as people rush to take advantage of the credit, but a sharp decline afterward. By 2030, there will be 8.3 million fewer electric vehicles and plug-in hybrids on U.S. roads than there would have been if incentives had remained in place, according to a study led by Jesse Jenkins, an assistant professor at Princeton University.
Republicans have also abolished penalties for violations of clean air standards, which had pushed carmakers to produce electric vehicles. That has given carmakers a green light to produce more big pickups and SUVs that tend to be very profitable.
GM is among companies exploiting such policy changes. The carmaker, American’s largest, is investing $900 million to manufacture V-8 engines near Buffalo, New York. Vehicles that run on gasoline or diesel now have “a longer runway,” Mary T. Barra, GM’s CEO, said last month.
But carmakers cannot give up on electric models.
U.S. electric vehicle sales rose just 1.5% in the first six months, according to Cox Automotive. But globally sales rose 28% to 9.1 million vehicles, according to Rho Motion, another research firm. That figure includes the United States and Canada as well as China and the European Union.
Carmakers that ignore this fast-growing market may not be in business 10 years from now. Barra acknowledged as much. “Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production,” she said.
The growth of autonomous driving technology favors electric vehicles because it is much easier to integrate self-driving software into a car where all the systems are electronic.
“If you don’t electrify fast enough you’re also losing out on the autonomous transition, whenever that happens,” said Anil Khurana, a professor at Georgetown University’s McDonough School of Business.
The quandary for GM and other automakers is that they do not yet make money from electric vehicles. Development costs are high, and sales volumes are too low to achieve the cost savings that come from mass production.
Ford said this week that it lost $1.3 billion on sales of electric cars during the second quarter, although it edged closer to profitability. Now that U.S. government policy has shifted in favor of fossil fuels, it will take longer for carmakers to turn a profit on electric vehicles.
Many groups remain committed to electric vehicles.
The tide has turned against electric vehicles in the halls of power, but there is still a political movement behind them.
Veloz, an organization whose members include automakers, utilities and charging companies, unveiled a video advertisement last month narrated by Nick Offerman, the actor best known for playing Ron Swanson on the sitcom “Parks and Recreation.”
The ad highlights the easy maintenance of electric vehicles, which don’t require oil changes. “EVs have fewer parts, fewer repairs and are less expensive to drive,” Offerman says. The ad is part of a $43.5 million marketing campaign funded by Electrify America, a subsidiary of Volkswagen that operates fast chargers in the United States and Canada.
Many states still offer rebates of several thousand dollars on electric vehicle purchases, as do some utilities. Residents of California, one of the most generous states, can receive up to $12,000 toward the purchase of an electric vehicle or plug-in hybrid if they scrap an older vehicle with a combustion engine and meet certain income limits.
But electric vehicle bashing by Trump, who has called them “lunacy” and a “hoax,” could be pushing some Republicans away from the technology, said Mike Murphy, the CEO of the EV Politics Project, a group that seeks to end what it calls “the needless partisan divide over EVs.”
Republicans have long been skeptical of electric vehicles, but some showed more openness to the technology after Elon Musk, the CEO of Tesla, spent hundreds of millions of dollars to help elect Trump, Murphy said, citing survey data. Republican aversion to electric vehicles rose again after Musk and Trump fell out.
“The bashing does have an effect on Republican consumers,” said Murphy, who previously worked as a Republican consultant.
EVs are getting better and cheaper.
Tesla’s sales have been declining since last year, falling 14% in the April to June quarter. But the decline stems, in part, from the company’s reliance on two older designs, the Model 3 and Model Y.
It is pretty clear that there is strong demand for electric vehicles if they are affordable, stylish and able to travel 300 miles or more between charges. GM more than doubled its sales of electric vehicles in the second quarter, helped by the Chevrolet Equinox, which has a starting price of around $35,000.
Tesla’s decline creates an opening for other carmakers to convince buyers to try electric models.
Erin Keating, an executive analyst at Cox Automotive, describes herself as an “EV skeptic,” but was impressed by a Hyundai Ioniq 9, a large electric SUV, that she drove recently. “It looks familiar to me,” she said. “I’m not looking at it like it’s a spaceship.”
Keating said she expected sales of electric vehicles to grow gradually as more people like her become comfortable with the technology.
Electric vehicles typically cost thousands of dollars more than cars fueled by gasoline, but the tariffs that Trump has imposed on imported vehicles and parts could narrow the gap. Six of the 10 most American-made cars are electric, according to Cars.com, an online car buying site. The top four are Teslas. Volkswagen’s ID.4 and Kia’s EV6, which roll out of U.S. factories, also made the list.
“Certainly the more that a vehicle uses U.S. parts, the less impacted they are by tariffs,” said David Greene, an industry analyst at Cars.com. But he added that retail prices would depend on how carmakers spread the cost of tariffs among different models.
The number of public chargers is growing even though the Trump administration has blocked federal funds that cover some of the cost. Nearly 17,000 new fast charging ports, which can recharge an electric vehicle in half an hour or less, will go into operation this year, the most in a single year, according to Paren, a research firm. Fear of not being able to charge is a big reason many people hesitate to buy electric vehicles.
Robert Barrosa, the CEO of Electrify America, said that some of its stations were in almost constant use, and there are still not enough chargers. That provides a strong incentive to keep building more.
“When you look at this more from a global perspective, the EV space is taking off,” he said. “As much as people may try to push back against it, it’s coming.”
This article originally appeared in The New York Times.
