Battery EVs represented 8% of the U.S. market in 2025 vs. over 30% in China and about 20% in Europe. This penetration may drop to 6% in the U.S. this year as a result of new federal policies introduced in 2025 whereas it is increasing in most — if not all — other markets, whether major and smaller ones. 

 

The dogmatic position of the current U.S. administration against clean mobility is widening the gap between the U.S. automotive market and the rest of the world. This in turn significantly jeopardizes the long-term competitiveness of the U.S. auto industry on the global stage. 

 

This sole global competitiveness issue would suffice to argue against the radical anti-EV policies of the current U.S. administration. Yet, there are two other significant arguments in favor of clean vehicle policies. First, they help countries reduce their dependency on imported fossil fuel, thus on uncertain geopolitics. In my article “It is Time to Wean Transportation Off Oil Dependency” published last March, I focused on this dimension highlighted by the war in Iran. Second, the most critical argument in the long run is global warming. But let’s stick with the competitiveness dimension here. 

 

 

EV Portfolio in the U.S. — Most OEMs Step Back, Few Accelerate

The U.S. administration repealed the $7,500 federal, clean vehicle incentive last September. They also did everything they could to reduce the financial assistance towards investment in the much-needed battery supply chain and charging infrastructure. As a result, EV penetration dropped from 8% to 5% before the Iran war started. It since partially recovered to 6% as higher gas prices are helping consumers realize that EVs offer lower operating costs, in particular for energy. 

 

The acquisition cost of EVs often remains an issue vs. equivalent versions with internal combustion engines (ICE), which justified the incentive. China, and to a lesser extent Europe, is closing this cost gap thanks to increasing economies of scale. This is not happening in the U.S., which will widen the overall U.S. competitiveness gap vs. the rest of the world.

 

As mid-term projection for EV demand has dropped, GM, Stellantis, Ford and others cancelled, postponed, or downsized future EV programs and battery manufacturing capacity projects for the U.S. This product strategy reversal led to over 50 billion dollars in write-offs over the past 12 months.

 

Conversely, GM, Stellantis, and Ford announced significant investments in ICE manufacturing capacity. For instance, GM will spend over a billion dollars in V8 engine capacity, including $888 million for its Buffalo, NY plant. Similarly, Stellantis is bringing back the “Hemi” V8 lineup.  Lower R&D and investment budgets as well as a new focus on high-margin V8s are certainly good for the stock market in the short run, but they will make it harder to compete globally in the long run. 

 

It is interesting to note that Toyota was slower than the most OEMs to embrace electrification a few years ago, betting on their strong hybrid portfolio. Yet, their operating margin was the highest among major OEMs in 2025. Today, Toyota is boosting its EV portfolio when U.S. players are scaling theirs down. Toyota’s stable roadmap will likely continue to perform better in the long run, delivering competitive products and scaling progressively.

 

Whereas demand for battery EVs has slowed down, electrified powertrains — mainly plug-in hybrids and extended range EVs — can help educate drivers. Their sheer volume can also progressively build up the ecosystem and economies of scale for batteries, motors, and power electronics, as well as the charging infrastructure. These powertrain options can bridge the strategy gap although they are technically sub-optimal vs. battery EVs.

 

 

Preserving Long-Term Global Competitiveness 

The CEOs of essentially U.S.-centric GM and Ford seem convinced that EVs are the endgame and that the U.S. market is experiencing a temporary distortion. Ford’s Farley even has great admiration for Xiaomi’s products. Yet, their short-term announcements say otherwise, partly to avoid the wrath of the federal administration. How can they reconcile the short and the long terms?

 

All carmakers must continue to invest in electrification if they are to remain relevant global players, whether their domestic market justifies it or not. The relatively weak U.S. EV market means GM and Ford must remained aligned with global trends. To this end, they must compete where they can learn the most, i.e., China, whereas Europe offers another valuable battlefield. 

 

It is interesting to compare today’s competitive situation between U.S. and China in the automotive space with that of 2018. Indeed, Chinese companies then had R&D activities in Silicon Valley to leverage local expertise as analyzed in the article “China Leverages Silicon Valley’s Mobility Ecosystem” I published in March 2018.

 

China is a good market for GM to learn from, less so for Ford as the two companies control respectively 6% (via its JVs with SAIC) and 0.5% of the market. The situation is somewhat reversed in Europe, where Ford holds 2.5% of the market whereas GM is absent. Stellantis can leverage its strong European position but currently has an even smaller presence in China than Ford — besides its partnership with Leapmotor.

 

What is actually happening? In 2022, Ford formed a “skunkworks” team independent from the main engineering department to develop an advanced $30k mid-size electric truck platform. The projected outcome is promising but the project will only be successful is the products built on this platform are competitively priced vs. ICE competitors, thus can drive demand without any incentives. In addition, these products should be offered in markets where their overall performance can be benchmarked against globally best-in-class vehicles.

 

GM, the OEM which relies most heavily on the U.S. market (about 2/3 of global sales), can learn from China where the company sells around two million vehicles through JVs. In addition, Cadillac has already largely pivoted towards EVs in the U.S., five of its nine-models being already battery electric. Yet, these vehicles represent a marginal volume and will not generate significant economies of scale.

 

Regardless of the OEM, it remains critical to learn from best-in-class players, potentially by partnering with them as VW Group has done with Xpeng and Rivian. This search for global competitiveness does not only apply to electrification. Accelerated progress is also paramount in software-defined vehicle (SDV), ADAS, AI, and in shortening vehicle development cycles.

 

 

(Likely) Future Policy Reversal and the Need for Stability

The next U.S. federal government will likely reverse the current policies, after concluding that they are not only putting the U.S. auto industry at a significant long-term risk but also worsening global warming of course. This probably explains why certain OEMs have postponed EV programs by two to three years.

 

This being said, companies will most likely invest more carefully then for fear of another policy reversal four years later, and another wave of write-offs. The corporate world needs a stable regulatory environment to plan and invest boldly in order to be globally competitive.

 

Even if the next U.S. administration restore policies favoring clean mobility, the lost momentum in the development of new EVs and battery manufacturing capacity will be hard to regain. In the meantime, the re-purposing of new capacity for stationary battery energy storage system (BESS) targeting data centers and intermittent energy generation, such as solar and wind, is an ideal opportunity. It helps develop local expertise and supply chains in the absence of a strong EV market.

 

The U.S. automotive market is closed to Chinese import. This position is not sustainable in the long run, especially as Chinese OEMs already have a strong presence in Mexico and are building a foothold in Canada. The later the U.S. opens its borders, the more painful it will be for domestic OEMs as the product competitiveness gap is widening. A progressive opening with staged tariffs, local manufacturing, and technology transfers could be helpful.

 

If U.S. policies were to remain pro-ICE and anti-Chinese imports for a significant period of time, GM, Ford, Stellantis could afford to stay largely away from EVs in the U.S. and milk ICE vehicles — notwithstanding global warming of course. But this is very unlikely. Remaining in the global race is paramount.