American electric vehicle industry is collateral damage in the climbing of Trump’s trade war

By Alexa St. John

DETROIT (AP) – The Blitz price of President Donald Trump has sent shock to all aspects of the global economy, including the automotive sector, where the plans of several billion dollars to electrify in the United States are particularly at risk.

Here is what consumers should know about the impact of prices on electric vehicles.

Where is EV adoption in the United States?

The EVs represented around 8% of new car sales in the United States in 2024, according to motorintelligence.com.

Some of these sales can be allocated to extended tax credits for EV purchases, a Biden era policy which has aroused interest buyer.

Tesla owned the majority of US EV US market shares in 2024, 48%. But this share has decreased in recent years because brands such as Ford (7.5%), Chevrolet (5.2%) and Hyundai (4.7%) have started to offer a greater variety of electric models at better prices, according to Kelley Blue Book.

Electric vehicles are more expensive than their petrol equivalents. The new gas vehicles sold on average $ 48,039, according to Kelly Blue Book Data, while electric vehicles sold $ 55,273 on average.

The prices add to the costs of an already volatile and uncertain EV transition, said Vanessa Miller, a litigation partner focused on automotive manufacturing in the Foley & Lardner law firm.

What makes EV manufacturing so difficult?

Biden’s tax credits essentially force car manufacturers to obtain more and more their EV content from the United States or commercial allies in the coming years so that their vehicles are eligible. Car manufacturers have worked to build an EV supply chain across the country and significant investments were devoted to these efforts.

Electric vehicles assembled here include the Tesla models, the Ford F-150 Lightning and more. Tesla could actually be the least vulnerable given the quantity of its vehicles in the United States

Although the industry increases, prices mean costs for car manufacturers and their buyers will remain high and could increase, while increasing the prices of the many parts of electric vehicles from China and elsewhere. Critical minerals used in the production of batteries to the vehicles themselves, China diverts American industry.

Car manufacturers were already withdrawing from ambitious electrification plans in the middle of the reduction in federal support and are in cash on what is the less lucrative side of their business.

What does the prices and EV stocks mean?

Higher prices can push car buyers on the used cars market, but they are not likely to find a lot of respite.

If consumers do not buy as many vehicles, car manufacturers will have to prioritize their investments and their manufacture. This means that the cars that buyers want and that are the most profitable. Motor manufacturers still lose thousands of dollars on each EV they win and sell, but they earn money from large vans and popular gas gourmets.

These manufacturers “have put a certain investment in electric vehicles, and it would probably be even more wasted to move away from it completely than to find the new level at which it is logical to maintain its production,” said Karl Brauer, executive analyst of the Iseecars.com car research site. This level “will certainly be lower than it was,” he added.

Doing fewer electric vehicles will not help reduce their costs anymore.

Albert Gore, Executive Director of the Zero Emission Transportation Association, said in a press release that the EV and batteries sector strives to ensure that the American automotive industry is developing and that his group will work with the administration on productive commercial policy.

“The prices on our long -standing business partners, many of which have committed billions of direct investments in American factories, introduce uncertainty and risks in an industry that creates jobs and brings new economic opportunities to communities across the country,” said Gore.

If not, how did Trump policies suffocate the growth of electric vehicles?

Trump has already brought an ax to the federal electric vehicle policy. He campaigned on a wish to put an end to what he called the “EV mandate” of former president Joe Biden.

Biden’s electric vehicle policies did not have to have car manufacturers to sell electric vehicles or consumers to buy them, but they have prompted manufacturers to increase their electric offers in the coming years. Trump put an end to Biden’s goal for 50% of all new vehicles sold in the United States to be electric by 2035 during his first days in power.

Also under Biden, the environmental protection agency and the national road safety administration rules on greenhouse gas emissions and the fuel economy should become more and more strict, but could be welcomed by car manufacturers selling an increasing number of electric vehicles alongside more economical fuel vehicles. Trump administrators are already reassessed program standards.

It is also likely to seek to repeal the tax credits.

Alexa St. John is a journalist by Associated Press Climate. Follow it on x: @alexa_stjohn. Join her at ast.john@ap.org.

The climate and environmental coverage of the Associated Press receives financial support from multiple private foundations. AP is solely responsible for all content. Find the AP standards to work with philanthropies, a list of supporters and coverage areas financed at AP.ORG.

Originally published: April 4, 2025 at 9:42 a.m.