US EV industry collateral damage in Trump’s escalating trade war

Detroit: President Donald Trump’s tariff blitz has sent shock waves throughout every aspect of the global economy, including the auto sector, where multi-billion-dollar plans to electrify in the United States are especially at risk. Here’s what consumers should know about the impact of tariffs on electric vehicles.

Where does EV adoption stand in the US?

EVs accounted for about 8 per cent of new car sales in the US in 2024, according to Motorintelligence.com. Some of those sales can be attributed to expanded tax credits for EV purchases, a Biden-era policy that spurred car buyer interest.

Tesla held a majority of US EV market share in 2024, at 48 per cent. But that share has declined in recent years, as brands including Ford (7.5 per cent), Chevrolet (5.2 per cent) and Hyundai (4.7 per cent) began to offer a wider variety of electric models at better price points, according to Kelley Blue Book.

Electric vehicles remain more expensive than their gasoline-powered equivalents. New gas vehicles sold for $48,039 on average last month, Kelly Blue Book data says, while EVs sold for $55,273 on average.

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

What makes US EV manufacturing so challenging?

Biden’s tax credits essentially required automakers to get more and more of their EV content from the US or trade allies over the coming years in order for their vehicles to qualify. Automakers have worked to build an EV supply chain across the country and significant investment has gone toward these efforts.

EVs assembled here include Tesla models, the Ford F-150 Lightning and more. Tesla actually might be least vulnerable given how much of its vehicles come from the US. Though the industry is growing, tariffs mean costs for automakers and their buyers will stay high and might go higher, as well as hike up the prices of the many parts of EVs still coming from China and elsewhere. From the critical minerals used in battery production to the vehicles themselves, China laps the US industry.

Automakers were already pulling back on ambitious electrification plans amid shrinking federal support and are strapped for cash on what is the less lucrative side of their businesses.

What do the tariffs mean for EV pricing and inventory?

Higher prices might push car buyers to the used car market, but they aren’t likely to find much respite there.