Alexa st. John
DETROIT (AP) – President Donald Trump’s tariff blitz has sent shockwaves across every aspect of the world economy, including the auto sector, where billion-dollar plans to electrify in the US are particularly at risk.
Here’s what consumers need to know about the impact of tariffs on electric vehicles:
Where in the US are EV adoptions?
According to Motorintelligence.com, EVS accounted for around 8% of new car sales in the US in 2024.
Part of these sales could be attributed to an expanded tax credit for EV purchases, a Biden-era policy that spurred the profits of car buyers.
Tesla held the majority of the US EV market share at 48% in 2024. However, according to Kelley Blue Book, this share has been declining in recent years as brands including Ford (7.5%), Chevrolet (5.2%) and Hyundai (4.7%) have begun offering a wider range of electric models at better prices.
Electric vehicles are more expensive than their gasoline equivalents. According to data from the Kelly Blue Book, the new gas vehicle sold for an average of $48,039 last month, while the EV sold for an average of $55,273.
Vanessa Miller, a litigation partner focused on automotive manufacturing at law firm Foley & Lardner, said tariffs add the cost of an already volatile and uncertain EV transition.
What makes EV manufacturing so challenging?
Biden’s tax credit essentially required carmakers to acquire more and more EV content from the US or trade allies in the coming years in order for the vehicle to qualify. Automakers are working to build EV supply chains nationwide, and there is a significant investment in these efforts.
The EVs assembled here include Tesla models, Ford F-150 Lightning, and more. Tesla may not be actually vulnerable given how many vehicles are coming from the US
The industry is on the rise, but tariffs mean the cost of automakers and their buyers, staying high and can be high, increasing prices for many parts of EVs that are still coming from China and elsewhere. From the critical minerals used in battery production to the vehicles themselves, China has lost its US industry.
Automakers have already pulled back their ambitious electrification plans amid shrinking federal support, and are bound by cash to the less favorable aspects of their business.
What does tariff mean for EV pricing and inventory?
A higher price could push car buyers into the second-hand car market, but it doesn’t take much rest there.
If consumers don’t buy that many vehicles, automakers should prioritize investment and manufacturing. That means the car the buyer wants and it is the most profitable. Automakers lose thousands of dollars each time they make and sell, but they make money from big, popular gas-eating pickup trucks and SUVs.
These manufacturers “have made certain investments in EVs and leaving them completely will probably be even more wasted,” says Carl Blauer, executive analyst at the automated research site ISEeCars.com. That level “will certainly be lower than what it was,” he added.
Less EVs won’t help you reduce costs right away.
Albert Gore, executive director of the Zero Emissions Transport Association, said in a statement that the EV and battery sector are working to ensure that the American automotive industry grows and that his group works with the administration on productive trade policies.
“Our longtime trading partner tariffs are introducing uncertainty and risks into an industry where many people are committed to investing directly in their US factories, creating jobs and bringing new economic opportunities to communities around the country,” Gore said.
How else did Trump’s policy curb US EV growth?
Trump has already adopted hand-hatch in federal policies. He made a vow to end what he called former President Joe Biden’s “EV Mandate.”
Biden’s EV policy did not require automakers to sell EVs or buy consumers, but encouraged manufacturers to increase their electrical products over the next few years. Trump ended Biden’s goal so that 50% of all new vehicles sold in the US become electricity when they take office by 2035.
Additionally, under Biden, the Environmental Protection Agency and regulations on national highway traffic safety management regarding greenhouse gas emissions and fuel economy in vehicles have become increasingly difficult, but have been able to meet the automakers selling more and more EVs, along with more fuel-efficient gasoline-powered vehicles. Trump’s managers have already reevaluated emissions standards.
He is also likely to seek to eliminate the tax credit.
Alexa St. John is a climate reporter for the Associated Press. X: Follow her at @Alexa_stjohn. Contact her at ast.john@ap.org.
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Original issue: April 4, 2025, 12:42pm EDT
