President Trump’s decision to revoke his “EV mandate” has given automakers a much-needed reprieve from regulatory hurdles. However, this move could make it harder for them to compete globally with cheaper Chinese rivals. The U.S. car companies are already undergoing a major transformation as they adapt to new global norms. Trump’s policies, while intended to boost domestic manufacturing, may leave them struggling against China in the global market while working behind their backs.
The directive came shortly after Trump signed an energy-focused order that included plans to eliminate an executive order aimed at promoting electric vehicles (EVs). This move likely also signals the end of a $7,500 tax credit for EV buyers and stricter emissions rules starting in 2027. Industry leaders have praised Trump’s rollback of restrictive policies, which they say distort the market.
Toyota emphasized that these changes won’t harm their business, with one CEO stating that artificial government mandates don’t work. The Alliance for Automotive Innovation echoed this sentiment, citing a mismatch between rising EV demand and fixed sales targets due to existing regulations. “You can’t get ahead of the customer,” said John Bozzella, president and CEO.
Automakers are less concerned about the loss of tax credits since only about 15% of models qualify. Their main worry lies in the difficulty of accessing production tax credits for EVs and battery manufacturing, which are critical to profitability. Ford CEO Jim Farley highlighted how these credits have been essential for their Midwest factories, built specifically for EV production.
The U.S. auto industry remains global, but China’s rapid growth and competitive advantages pose a significant threat. With subsidies heavily supporting automakers like BYD, Geely, and SAIC, Chinese manufacturers enjoy huge cost advantages. The ongoing ban on importing software from China further complicates matters, though China is expanding its presence globally, including in the U.S.
For the industry to compete with these low-cost Chinese brands, automakers will need to innovate more, tighten their belts, and collaborate more effectively. GM is considering ways to cut red tape, while Ford has explored new markets to offset challenges. The broader implication is that the U.S. market faces increasing competition as EV adoption worldwide grows faster than the industry’s ability to adapt.
Tesla’s situation is another concern, with its billionaire CEO, Elon Musk, leading Trump’s efforts to streamline regulations. The sale of regulatory credits could dry up if Trump reverses Biden-era rules, further straining relationships between automakers and government.
Source: https://www.axios.com/2025/01/23/trump-ev-mandate-chinese-rivals-cars