The US electric vehicle market is facing a tough time. New tariffs on imported goods have created a ripple effect, impacting the industry’s growth. Before this, the Biden administration had implemented policies to support electric vehicles, including tax credits for buyers and a goal for 50% of new car sales to be electric by 2035. However, these policies were repealed or revised under the Trump administration, affecting investment in the sector.
According to Motorintelligence.com, electric vehicles made up 8% of new car sales in the US in 2024. This growth was driven by tax credits that encouraged consumer interest. However, the average price of electric vehicles is still higher than gas-powered cars. In 2024, the average price of an electric vehicle was $55,273, compared to $48,039 for a gas-powered car. This price difference is a major factor in consumers’ preference for traditional vehicles.
The US tariffs have increased production costs for electric vehicles, making it more expensive for manufacturers to produce them. This is because the industry relies heavily on China for critical battery minerals and other components. As a result, manufacturers are passing these increased costs on to consumers.
Some car manufacturers, like Elon Musk’s Tesla, believe in the future of electric vehicles and are expanding their US production capacity. This could help Tesla avoid some of the negative impacts of the tariffs. However, prolonged trade restrictions could still limit the company’s growth.
Traditional automakers like Ford and Chevrolet have also entered the electric vehicle market, but the high tariffs are forcing them to reevaluate their investment in this sector. Since electric vehicles are currently less profitable than popular gas-powered trucks and SUVs, these companies may slow down their introduction of new electric models if production costs cannot be reduced as planned.