For the US EV Market, a More Turbulent Road Lies Ahead

Momentum for electric vehicles in the United States is starting to slip.

After years of rapid growth — fueled by federal incentives and nearly $200 billion in announced EV manufacturing investments — EV sales fell 4% in 2025 following a record-breaking 2024. Since then, at least $19.9 billion in planned manufacturing investments were canceled and automakers have begun rethinking their all-electric future.

Federal policy shifts are creating a turbulent environment for the industry: The EV purchase tax credit expired in September, funding for the National Electric Vehicle Infrastructure program was frozen for months, and new tariffs and proposed rollbacks of fuel efficiency standards added further uncertainty. Most recently, the U.S. Environmental Protection Agency finalized a rule overturning its endangerment finding, repealing federal limits on vehicle tailpipe emissions.

Yet, there are signs of progress: Charging infrastructure continues to expand, and states and businesses are stepping in to sustain momentum. While the industry is still growing, it’s now doing so more slowly.

This slowdown carries broader consequences beyond climate goals. Electric vehicles are a key driver of innovation across batteries, semiconductors, robotics, casting, artificial intelligence and software. As countries around the world — especially China and in Europe — accelerate their EV industries, a U.S. pullback weakens its global competitiveness.

Here we look at the current state of the passenger EV industry to better understand the impacts of the changing federal landscape and potential implications for U.S. automakers, suppliers and workers.

EV Sales by the Numbers

EVs accounted for 9% of passenger car, truck and SUV (light-duty vehicle) sales in 2025, with over 1.5 million purchased EVs , including battery electric vehicles and plug-in hybrid electric vehicles, according to Argonne National Lab, a U.S. Department of Energy research lab. This was 4% lower compared to 2024, when close to 1.6 million EVs were sold, and the first decline in a decade for battery electric vehicles, which makes up the majority of the market (82% in 2025).

Sales in the third quarter of 2025 — about 32% of the year’s total— were a key driver as consumers rushed to take advantage of the expiring federal EV purchase tax credit, before sales fell at the end of the year.

Despite the decline, 2025 was still the second-best year on record for U.S. EV sales. However, if sales continue to slow, the gap between the U.S. and countries with leading EV markets — where EVs accounted for 48% to 92% of car sales in 2024 — could widen. Unlike the U.S., EV adoption in these countries is expected to keep rising.

EV manufacturing, particularly battery production, improves with experience. If U.S. sales and production continue to lag, American manufacturers risk falling further behind, weakening the U.S. auto industry’s global competitiveness.

 EV Adoption Continues, but Expect a Slower Pace

Following an immediate decline in EV sales after the federal EV purchase tax credit expired, the longer-term impact of reduced consumer incentives and policy uncertainty remains to be seen. Forecasts, however, agree that long-term adoption will continue, just at a slower, more market-driven pace.

A recent projection by BloombergNEF, an energy research firm, expects the share of EVs in passenger car sales to reach 24% by 2030. This is lower than the 46% sales share it projected in 2024. Likewise, the International Energy Agency’s 2025 forecast expects sales of EV light-duty vehicles to reach 20% by 2030, compared to its 50% prediction in 2024. While these forecasts fall short of the initial predictions, they signal that EVs are becoming a competitive, mainstream market that could impact emissions, competitiveness, workforce and industry planning.

Forecasts of EV adoption, however, can fluctuate and be highly uncertain and sensitive to global news and current events. For example, the recent war in Iran could reignite consumer interest in EVs as oil prices surge.

Charging Infrastructure Deployment Continues to Accelerate

The U.S. continued to expand its charging network, even as EV adoption slowed, and attacks targeted the National Electric Vehicle Infrastructure  Program (NEVI) that aimed to deploy 500,000 public charging ports by 2030,. More than 18,000 direct current fast charging (DCFC) ports were installed nationwide — a 30% increase over 2024.

This growth was driven mostly by private investments from automakers, retailers and charging companies, helping to counteract declines and pauses in federal funding. Companies like Tesla, Electrify America and Ionna mostly built larger, multi-port charging stations to increase charging speed, reduce wait time and improve user experience.

Tesla deployed nearly 6,800 DCFC ports, while other leading companies installed an additional 6,100. There are now roughly 240,000 public charging ports across 78,000 U.S. stations, with California, Texas and Florida leading the growth in DCFC ports deployment. An additional 19,500 DCFC ports are estimated to be installed in 2026 through public and private funds.

In 2025, implementation of the NEVI Program lagged significantly after the Trump administration froze obligated but unused funds pending a program audit. Court rulings lifted that freeze several months later, but some charger startups had already been affected. The NEVI program accounted for  just 3% of the total DCFC ports added that year — not surprising given that, as of early 2026, states had spent only 2% ($94 million) of the billions available.

Despite its challenges, the program has prompted private sector investment, forced a focus on developing fast charging networks along designated corridors and spurred states to develop long-term EV infrastructure plans. Going forward, the program is expected to gain momentum as states have obligated approximately $1.4 billion through 2028.

EV Manufacturing Investments Have Mostly Been Canceled in the Midwest and the South

The cancellations of nearly $20 billion in announced EV manufacturing investments since 2025 are being felt the most in the Midwest and the South. As a result, thousands of potential jobs, state tax revenues and benefits in the broader economy will not come to fruition.  

States including Tennessee, Ohio and Indiana saw the largest number of announced cancellations for EV assembly facilities. In one of the industry’s largest pivots, Ford canceled its $2.8 billion investment plan to produce electric trucks at BlueOval City in Stanton, Tenn., shifting the site to producing gas-powered trucks. Ford had initially envisioned BlueOval City as an EV manufacturing campus, housing an electric truck assembly plant and a $2.8 billion battery plant through a joint venture with SK On, an electric battery manufacturer from South Korea.

Additional battery manufacturing cancellations since the beginning of 2025 include a $5.8 billion investment for a Kentucky complex, which also resulted from the dissolution of the Ford and SK On joint venture, and the scrapping of a $3.2 billion Stellantis battery factory in Illinois.

States and Local Governments Are Stepping Up Support

In the absence of federal policies, states and local governments across the U.S. are playing a crucial role to move the transition forward.

Colorado, Texas, Massachusetts, Illinois and others are offering direct financial incentives to purchase passenger EVs through rebates that help replace the $7,500 expired federal tax credit. Since November, Colorado increased their EV rebate from $6,000 to $9,000, while Massachusetts offers rebates between $3,500 and $6,000 through its MOR-EV program.

Utilities are also offering supportive programs to residential and commercial customers. For instance, Tucson Electric Power in Arizona and Alabama Power offer lower electricity rates through time-of-use charging rates, if they charge their EVs during off-peak periods to minimize strain on the electric grid.

Although local and state policies and incentives are crucial to accelerating the adoption of EVs and associated infrastructure, they’re most impactful when working in tandem with federal-level programs. On their own, they are unlikely to provide enough market signals and incentives to drive the EV transition forward in the same way that a federal-level incentive would.

Source: Authors’ research

Automakers Are Adjusting their EV Strategies

Major automakers are adjusting their EV ambitions following a collective $70 billion in losses from canceled projects, devalued assets and the high cost of scaling back earlier EV-focused strategies.

Sources: Reuters, Reuters, WardsAuto, Automotive News

While these adjustments have raised uncertainty about what lies ahead for EVs, a few trends are noticeable. Automakers are:

• Shifting away from all-electric targets. Automakers like Ford, GM and Stellantis are moving toward a more flexible demand-driven mix of hybrids and gas cars so they can be more profitable in the present context.
• Prioritizing more affordable EVs over luxury models. Facing competition from Chinese EV makers and a lack of consumer interest in premium EVs, companies are moving toward lower-cost models. For example, Ford and Stellantis are pausing production of electric pickup trucks like the Ford F-150 Lightning and the Stellantis Ram. Also, Ford is launching a mid-size electric pickup starting around $30,000, and GM is reintroducing the Chevrolet Bolt at a similar price, which it expects to make up a significant portion of its EV production next year.
• Expanding batteries beyond EVs. Some automakers now have greater battery production capacity than needed and are pivoting to build batteries for energy storage systems, capitalizing on the growing expansion of data centers. Ford, for example, plans to repurpose its Glendale, Kentucky, battery manufacturing facility for energy storage systems.

Automotive Suppliers Are Caught in the Middle

The EV transition has not been linear. The difficulty of predicting when EV volumes will dominate is resulting in unstable supplier production schedules.

While suppliers that have made low EV investments may benefit from extended traditional gas-powered vehicle production, they still face long-term risks if they fail to adapt to electrification trends entirely.

In contrast, suppliers that have made significant EV investments may face underutilized production capacity, delayed return on investment from new factories, retooling and specialized training, and stranded assets if volume growth continues to remain slower than expected.

The slowdown is already causing financial and operational strain in the supply chain. Major suppliers, including Bosch, Magna and Continental, have announced job cuts to adjust their manufacturing capacity. Several of these companies are also diversifying into more stable sectors such as aerospace, defense and industrial manufacturing to hedge against the volatility in the automotive industry.

Autoworkers Are Facing Higher Volatility Than Expected

Given the differences in manufacturing processes and associated skills, transitioning the industry to EVs was always going to represent a significant shift for the manufacturing workforce, exposing some workers to more risk than others. However, the limbo and redundancies from EV production pauses and other restructuring events was unexpected to most workers.

GM’s Ultium Cells battery plants faced significant restructuring in October 2025, temporarily pausing production, citing a slowdown in EV adoption and evolving regulatory environment as key reasons for the 550 permanent and 1,550 temporary layoffs in Ohio and Tennessee. These decisions have particularly hurt hourly workers in production-focused roles, such as quality operators and material operators.

Similarly, Ford’s Rouge Electric Vehicle Center in Dearborn, Mich., placed over 700 hourly workers on temporary layoff in late 2024 after temporarily pausing production. After months of limbo, employees have now transferred to the Dearborn Truck Plant to work on F-150 gas and hybrid truck production.

As the industry keeps pivoting, automotive manufacturing workers must have the broad skills necessary to work across EVs, hybrids and traditional gas-powered vehicles. They can do this by leveraging foundational manufacturing skills while proactively upskilling in digital and electrical domains. Established programs including “earn and learn” apprenticeships, short-term credentials, collaborative partnerships between employers and community colleges or technical schools, and state support must be leveraged to support workers.

America’s Messy but Unstoppable Transition to EVs

The transition to EVs represents the most significant transformation in road transportation since the internal combustion engine became prominent and replaced pre-industrial forms of transportation. While the EV adoption curve has slowed in the U.S., the underlying technological and investment momentum makes the shift inevitable, with deep implications for labor, local economies and infrastructure.

Ensuring a successful transition will require a multifaceted approach involving careful planning, workforce training, public-private collaboration and adaptation to policy and market uncertainties. The EV transition is at a crucial juncture where sustained, long-term investment depends on a stable policy framework, especially at the federal level, ensuring the industry continues to grow. If done right, the EV transition can still be a win-win for the U.S. economy, workers and climate goals.