EV adoption enters new phase with end of subsidies
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Welcome to the next — and probably slower — phase of U.S. EV adoption after Tuesday's demise of federal purchase and lease subsidies.
Why it matters: The future of EV sales affects automakers' strategies, battery and mining companies, and planet-warming emissions from transportation.
Driving the news: Credits up to $7,500 for many new EVs — initially put in place until 2032 under the Biden climate law — are gone under the quick phaseout in the GOP budget law.
- So are credits up to $4,000 for used models.
- Analysts expect sales to decline, or at least plateau, after consumers rushed to tap vanishing incentives.
The big picture: Like that earworm of a '70s PSA, automakers are in "be prepared" mode.
- Many have revised EV production targets downward, but are still investing in battery development, ING analyst Coco Zhang notes.
- They're "betting on the ability to produce more efficient, affordable models," Zhang, the bank's VP of ESG research, said in an email.
- For instance, Ford is pushing ahead with development of lower-cost models, starting with a midsize four-door electric pickup with a $30,000 base price in 2027.
State of play: Fully electric vehicles were roughly 10% of U.S. sales in August, per Cox Automotive and S&P Global Mobility.
- S&P tallies similar sales last month.
- Some states, such as New York and California, are still offering incentives for EV buyers.
What's next: Look for sales to hover below 10% for the balance of 2025, Cox's Stephanie Valdez Streaty said in an analysis.
- "However, we still believe the EV mix of sales can climb to near 25% by 2030, well short of the 50% once envisioned, but certainly moving out of the 'niche' category," she writes.
The intrigue: BloombergNEF also slashed its outlook to account for the tax credits' demise and the regulatory pullback.
- The research firm's latest outlook, which includes plug-in hybrids, sees EVs at 27% of U.S. sales in 2030, down from the high-40s in its prior look-ahead.
- And this doesn't even account for EPA's effort to remove California's authority to set rules that some other states follow.
Yes, but: The policy landscape is fluid.
- In addition to pulling back tailpipe emissions rules, EPA's plan to rescind the "endangerment finding" would make it harder for successors to impose new ones.
The bottom line: "Continuously declining battery and production costs will improve the business case for EVs, though the speed of transition will now be left to the market," writes Zhang, the ING analyst.
Disclosure: Cox Automotive and Axios are both owned by Cox Enterprises.
