Automakers Pull a Slow U-Turn on EVs

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Written by John Egan for IIR News Intelligence (Sugar Land Texas)

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Summary

U.S. and Canadian automaking project activity is starting to show the effect of the slow pivot domestic automakers are making away from electric vehicles and toward hybrids and vehicles powered by traditional internal combustion engines, in response to the changing regulatory, tariff and financial regime around transportation pushed by President Donald Trump during the first year of his second term in office.

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Automakers Drive Away from EVs in Response to Trump Moves, Consumer Doubts

The decision by Ford Motor Company (Dearborn, Michigan) to book a $19.5 billion asset impairment charge last month, most of which was tied to reversing or abandoning its prior pursuit of electric vehicles (EVs), was a dramatic demonstration of the power President Donald Trump exercised over the sector in 2025. Between imposing tariffs on imported vehicles and parts, which is under review by the U.S. Supreme Court, and ending his predecessor's support for EVs contained in the Inflation Reduction Act and the Bipartisan Infrastructure Law, automakers faced high, perhaps unprecedented, levels of uncertainty.

Consumers didn't come to the rescue either. In a year when "affordability" became a rallying cry for many, the loss of $7,500 in federal tax credits turned the vehicle-buying public away from pricy EVs and towards more-affordable hybrids and vehicles powered by traditional ICEs. So-called "range anxiety" likely also caused some consumers to think twice about their choice of vehicle, as the national EV recharging network promised by Biden remains in a nascent stage.

"U.S. automakers have cancelled or placed on hold at least four projects tied to EVs worth a collective $27 billion during 2025, the first year of the second Trump administration," said Angela Hudson, Industrial Info's vice president of research for the Industrial Manufacturing Industry. "These moves--three postponements, one cancellation--were attributed to changes in the U.S. market around EVs and increased liability concerns related to future EV production in North America. In essence, it was a year when automakers asked themselves, 'Will there be a market for the EVs we have said we would produce?'"

During 2025, the first year of Trump's second term, automakers revised their product lines and capital expenditure (capex) plans to align with the president's strong preference for traditional internal combustion engine (ICE)-powered vehicles as well as consumer interest in hybrid vehicles. Over the last 12 months, the Trump administration cancelled federal tax credits of up to $7,500 for EVs, pulled funding to build a national EV recharging network, loosened tailpipe emission standards, cut back vehicle mileage efficiency standards and alternately cajoled and criticized automakers for not moving faster to pivot away from EVs.

"Once upon a time, automakers operated on five-year cycles mainly tied to consumer demand," commented IIR's Hudson. "Vehicle platforms were upgraded, or scrapped, in response to consumer demand."

Her colleague, David Pickering, IIR's senior vice president of research for the Industrial Manufacturing Industry, added this: "But that has changed in recent years: we're now in a four-year cycle driven by whichever party occupies the White House and has majorities in the House and Senate. A cycle once driven by consumers and operational considerations has been replaced by a political cycle. We see that continuing for the remainder of President Trump's term unless the mid-term elections propel Democrats into the majority in one or both houses of Congress."

In 2024, the last year of the Biden administration, about $6.9 billion was spent to assemble vehicles in the U.S. and Canada, according to data tracked by IIR. The majority of that, about $4.7 billion, went to assemble traditional ICE-powered vehicles. Roughly $2.2 billion was spent to assemble EVs.

During 2025, however, there was a pronounced shift: an estimated 93% of assembly outlays in the U.S. and Canada were tied to ICE-powered vehicles ($6.9 billion) while only $611 million was spent to assemble EVs.

Capital Investment Announcements

Trump promised that his actions would reinvigorate domestic automaking. The first-year results may bear him out, judging by capital commitments companies made during the year, including:

• General Motors Incorporated (GM) (Detroit, Michigan) last June said it would invest $4 billion over the next two years to boost domestic manufacturing capacity at plants in Michigan, Kansas and Tennessee. Most of this investment will be geared to providing ICE vehicles. As part of this investment, the company said assembly of the 2027 Chevrolet Blazer SUV would move from Mexico to Tennessee.
• Separately, last May, GM committed $888 million to develop and produce its next-generation V-8 ICE engine at its Tonawanda Propulsion plant in Buffalo, New York.
• Last October, Stellantis N.V. (Amsterdam, Netherlands), which makes Jeeps, Dodges and Chryslers, said it would invest $13 billion in U.S. factories through the end of this decade to launch five new vehicles and a new engine, creating over 5,000 jobs.
• Toyota (Toyota City, Japan) last November announced it would make a $10 billion capital investment in its U.S. manufacturing base over the next five years. About $1 billion of that will go to hybrids.

What's Ahead for 2026 & Beyond

"Automakers used to do a pretty good job listening to the customers and designing vehicles that meet those needs and wants," commented IIR's Pickering. "But in recent years, they drank the EV Kool-Aid and shifted a large percentage of their portfolio to EVs. That might have worked; when Trump was re-elected in 2024, the tax credits remained available and the charger industry was able to get enough charging stations operating to alleviate drivers' concerns over 'range anxiety.' But all of that changed."

But it was more than the imposition of tariffs, regulatory changes and loss of tax credits that is causing the industry to begin making a costly U-turn. Ultimately, the industry simply failed to convince U.S. buyers that EVs were the affordable vehicle of the future. For more on that, see July 18, 2024, article - Electric Vehicles: In the U.S., Initial Enthusiasm Gives Way to Buyer's Remorse.

"For 2026 and the next few years, successful automakers will be the ones that read the signals from the White House as well as consumers, and get back to making affordable vehicles that are aligned with the White House policy priorities," Hudson said. "We expect more postponements of EV investments and increased investments in manufacturing vehicles powered by ICEs and some form of hybrids. We expect the percentage split to tilt more sharply towards ICEs and hybrids and away from EVs."

Key Takeaways

• The first year of the second Trump administration saw dramatic regulatory, financial and tariff changes that have forced dramatic changes on automakers operating in the U.S. and Canada: EVs are out and vehicles powered by traditional ICEs and hybrid engines are in.
President Trump's actions, consumers remained relatively reluctant to purchase EVs, partly due to costs and partly because their travel options may be limited by EV "range anxiety."
• For 2026, and possibly the remainder of Trump's second term, IIR expects continued further shifts in automakers' assembly costs and capex to reflect the sunsetting of EV plans and the increasing emphasis on ICE and hybrid vehicles.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).