On October 27, according to the Financial Times, industry executives and experts warned thatThe United States may fall further behind China in the global electric vehicle race as the Trump administration's policy of favoring gasoline-powered vehicles has led to a sharp decline in investment in electric vehicles.


Trump

Trump scorns electric cars

Since returning to the White House in January, Trump has eliminated tax incentives to encourage consumers to buy electric vehicles and proposed repealing greenhouse gas emissions rules, a stark contrast to the Biden administration's support for the industry that year.

According to the "U.S. Clean Investment Monitor" database jointly established by research firm Rhodium Group and the Massachusetts Institute of Technology, in the three months to September this year, investment in the U.S. electric vehicle field (covering batteries, vehicle assembly and charging equipment) plummeted by nearly one-third year-on-year to $8.1 billion. Data shows that from April to September this year, approximately US$7 billion in electric vehicle investment plans were cancelled.

Industry executives and analysts pointed out that the rollback of U.S. policy support may reshape the industrial landscape in the next few years. This will not only strengthen China's advantage in the electric vehicle race, but also shake the EU's determination to implement a ban on internal combustion engine sales in 2035.

"We must accelerate the pace of research and development to compete with China." Volvo Cars CEO Håkan Samuelsson said. He added that the shift in White House policy would have a knock-on effect, and "as soon as these supportive policy signals weaken, all progress will slow down."


Trump cancels electric car subsidies

Some European carmakers have called on Brussels to relax its ban on gasoline engines so that models such as plug-in hybrids can continue to be sold beyond 2035.

Contrary to the Biden administration's support for electric vehicles,Trump warned that electric vehicles would lead to the "total destruction" of the U.S. auto industry and make consumers pay higher prices.

U.S. sales decline

The shift in policy in Washington has led agencies to cut forecasts for U.S. electric vehicle sales.

According to data from Arrow Consulting, pure electric vehicles are expected to account for 7% of sales in the United States by 2026, almost half of previous forecasts. Hybrid vehicles will account for 22%, traditional fuel vehicles will account for 68%, and plug-in hybrid vehicles will account for 3%.

Even by 2030, pure electric vehicle sales in the U.S. market are expected to account for only 18%, lower than the previous forecast of 25%, and far lower than Europe's 40% and China's 51%.

The Trump administration's support for gasoline engines has created a dilemma for traditional automakers: They are more profitable on gasoline vehicles, but at the same time worry about being left behind by Chinese rivals such as BYD and Geely in the competition for electric vehicles.

Risk of falling behind

Mark Wakefield, head of global automotive markets at Arrow, said the U.S.'s renewed focus on internal combustion engine vehicles is "very good news for the industry in the short term because it means billions of dollars in benefits."

But he warned that in the long term, Chinese companies will continue to advance the development of electric vehicles, which will give them advantages in price, battery technology and software. "If these traditional American automakers stop, they may fall behind."

This month, Strantis, which owns brands including Jeep and Peugeot, pledged to invest a record $13 billion in the United States over the next four years to boost production of gasoline and hybrid vehicles.

Ford CEO Jim Farley called the resurgence of gas-powered vehicles "a multi-billion-dollar opportunity." The U.S. automaker said this week that its electric car business lost $3.6 billion in the nine months to September, while operating profits on gasoline and hybrid models were $2.3 billion.

Regarding the profitability challenges of electric vehicles, Farley told analysts this week: "Competition is intensifying and Chinese vehicle manufacturers are expanding globally. At the same time, the industry faces declining returns due to overcapacity in electric vehicles and global pressure."