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The US risks falling further behind China in the global electric car race after the Trump administration’s championing of the petrol engine led to a steep drop in EV investments, industry executives and experts have warned.
Since returning to the White House in January, the US president has scrapped tax incentives for consumers to buy EVs and proposed axing rules on greenhouse gas emissions in a departure from the backing the Biden administration gave the industry.
EV-related investments, which span batteries, vehicle assembly and charging equipment, tumbled by almost a third to $8.1bn in the three months to September compared with a year earlier, according to US Clean Investment Monitor, a database created by Rhodium Group and the Massachusetts Institute of Technology.
Between April and September, about $7bn of planned EV investments were ditched, the data showed.
Executives and analysts said the rolling back of support in the US had the potential to define the industry in coming years, strengthening China’s hand in the EV race and sowing doubts in the EU over its ban on sales of internal combustion engines from 2035.
“We need to . . . be quicker in development to compete with the Chinese,” said Håkan Samuelsson, chief executive of Volvo Cars. “As soon as you weaken these signals, everything will slow down,” he added, referring to the knock-on effect of the change in approach in the White House.
Some European carmakers have called on Brussels to loosen its ban on petrol engines so that models such as plug-in hybrids can continue to be sold beyond 2035.
In breaking with the Biden administration’s backing of EVs, Trump has warned that EVs will lead to “complete obliteration” for the US car industry and higher prices for consumers.
The shift in Washington has already led to lower forecasts for EV sales in the US.
Full EVs will make up 7 per cent of sales in 2026, according to AlixPartners, almost half the consultancy’s previous prediction, with hybrids accounting for 22 per cent, ICEs 68 per cent and plug-in hybrids 3 per cent.
Even in 2030, it expects full EVs to make up just 18 per cent of sales in the US, down from an earlier prediction of 25 per cent, compared with 40 per cent in Europe and 51 per cent in China.
The Trump administration’s embrace of the petrol engine poses a dilemma for legacy carmakers, who make more money from petrol cars but at the same time fear losing ground in the EV race to Chinese rivals such as BYD and Geely.
Mark Wakefield, global automotive market lead at AlixPartners, said the US refocus on internal combustion vehicles was “very good news in the short run for the industry because it’s billions and billions of dollars of benefit”.
But in the long run, he warned that Chinese companies would push ahead with EVs, giving them an edge over pricing, battery technology as well as software. “These [legacy] carmakers risk getting behind them if they step off the treadmill.”
This month, Stellantis, owner of brands including Jeep and Peugeot, pledged to invest a record $13bn in the US over the next four years to increase the production of petrol and hybrid vehicles.
Ford chief executive Jim Farley has hailed the revival of the petrol engine as “a multibillion-dollar opportunity”.
The US carmaker’s EV business lost $3.6bn in the nine months to September, it said this week, compared with the $2.3bn in operating profits it has generated from petrol and hybrid vehicles.
Addressing the challenge of making money from EVs, Farley told analysts this week that “the competition is getting tougher, namely the Chinese original equipment manufacturers are expanding globally, and the industry faces lower returns due to the EV overcapacity and global pressure”.
Additional reporting by Edward White in Shanghai