In his first day of execution, President Donald Trump announced that his administration would eliminate what he calls “electric vehicle (EV) mandates” and “promote real consumer choice” by terminating regulations and subsidies, He claims this makes the EV too affordable for burning engine cars.
The order could undermine efforts to decarbonize cars and trucks, which is necessary if the world is to reach zero emissions. Road transport accounts for 12% of the world and 22% of climate pollution in the United States. Electric vehicles (EVs) have become a relatively climate-friendly alternative to fossil automobiles, resulting in lower emission rates due to their high efficiency. As the grid moves to cleaner, more efficient power supplies, such as solar and wind, the climate case for electric vehicles will only become stronger.
As prices fell, global electric vehicle sales soared, and countries implemented policies such as regulations and subsidies to encourage their adoption. In 2019, 2 million electric and plug-in hybrid vehicles were sold, accounting for only 2.5% of new car sales worldwide. In 2024, this number soared to 17 million, accounting for more than one-fifth of the new passenger cars sold last year.
But global electric vehicle sales growth last year was uneven. It mainly appears in China, with 11 million electric and plug-in hybrid vehicles sold. This is a 40% increase from the previous year, accounting for nearly two-thirds of global sales. Europe ranked second with 18% of new electric vehicles, but sales there fell 3% from the previous year due to the expiration of some government incentives. North America accounts for 1.8 million of global electric vehicle sales, accounting for more than 10% of global electric vehicle sales, but grew 9% in 2024. In other parts of the world, EV sales have rapidly increased to 1.3 million, 27% higher than in 2023.
The International Clean Transport Commission predicts that global climate pollution will peak this year and then begins to decline, thanks in large part to the adoption of electric vehicles. But the political atmosphere in countries like the United States remains a potential stumbling block.
Trump's impact on U.S. electric vehicle sales
The Trump administration is targeting regulations and government incentives that encourage the adoption of electric vehicles.
Relevant regulations include the company's average fuel economy or CAFE standards of the National Highway Traffic Safety Administration. They require automakers to achieve a certain per-gagalong efficiency on average. Sean Duffy immediately signed an order to “review and reconsider” all CAFE standards after the Senate confirmed as the new Secretary of Transportation.
In March last year, the Environmental Protection Agency or the EPA also issued strict average vehicle tailpipe emission standards. Since electric vehicles do not have tailpipes that can generate emissions, automakers can most easily meet these standards by increasing their sales of electric vehicles. Lee Zeldin, the agency’s new administrator, may also review and revise the rules. The Republican-led House voted last year to repeal the rule and ban the EPA from implementing future vehicle pollution regulations, but the Senate did not accept the bill.
The EPA also issued two waivers in December, setting stricter vehicle pollution standards in the state and requiring a growing number of new factory passenger car sales to be electric and plug-in hybrids to reach by 2035. 100 %. In addition, Washington, D.C., together with California’s accounts, has more than one-fifth of U.S. passenger car sales, and has adopted California’s EV license.
The above executive order calls for “termination of national emissions under appropriate circumstances to limit sales of gasoline-powered vehicles.” In the last Trump administration, the EPA revoked California’s waiver in 2019, and California sued. Biden EPA resumed waivers in 2021 before resolving the lawsuit. According to the California Air Resources Commission, “The Clean Air Act does not allow the revocation of exemptions.”
In an interesting wrinkle, many automakers are not selling enough to comply with regulations, so points must be purchased from companies selling electric cars such as Tesla. E&E News reported that nearly one-third of Tesla's profits over the past decade have come from selling these compliance credits, and Tesla previously lobbied to retain California's plans. The company's CEO Elon Musk played a major role in the Trump administration, including attempts to freeze federal funds and fire federal workers.
The Inflation Reduction Act also implements federal electric vehicle subsidies up to $7,500. Despite the executive order and Musk’s call for them to be eliminated, only Congress can amend the tax laws. Credit can also be transferred to participating car dealers, and they can then immediately lower the sale price — and the process is still running as of early February despite federal funds being frozen.
Many congressional Republicans have called for the e-vehicle tax credit to be removed. But the U.S. demands they made have stimulated hundreds of billions of dollars in domestic battery and electric vehicle manufacturing supply chain investment, mainly in areas represented by Republicans in the South and Midwest. A recent paper estimates that eliminating these tax credits will reduce U.S. electric vehicle sales by about 20% from now until 2035, which could hurt many of the jobs and local taxes generated by many people in manufacturing facilities.
Regardless of what happens with electric vehicle regulations and policies, experts predict that the share of electric vehicles sold by new U.S. passenger cars will continue to rise. From 2020 to 2023, their sales growth grew rapidly in 2024 as more Americans opted for the traditional hybrid. Cox Automotive predicts that the share of electric and plug-in hybrids sold by new U.S. cars will drop from 9% in 2024 to 10% in 2025, while standard hybrids account for 15% of the market.
Tesla's decline and China's rise
Tesla's vehicle sales fell for the first time since 2011 last year. Still, the company accounted for 48% of new electric vehicles in the U.S. in 2024, but that was down from 55% in 2023 and 64% in 2022.
Some of these declines may be due to Elon Musk's polarized behavior. In a survey conducted by Electifying.com, nearly 60% of current and potential electric vehicle owners said Musk’s controversial reputation actively made them buy Tesla. Similar reactions to Musk and Tesla appear to be reflected in recent European electric vehicle sales figures.
Globally, Tesla has long been the leader in all-electric vehicle sales, but Chinese automaker Byd is on the verge of winning the championship. Byd also sells nearly as many plug-in hybrids as all-electric cars; Tesla sells only all-electric cars.
Chinese electric vehicles have not yet entered the U.S. auto market, partly due to 100% tariffs. But now half of China's new passenger car sales are now electric, and its EV exports are also rising to many other countries.
Factors that determine the speed of electric vehicles
Research published in 2021 and 2023 found that insufficient public-fee infrastructure is a key barrier to wider adoption. Infrastructure has been accelerating at an accelerated pace in the U.S., but the Trump administration is trying to freeze funds from the National Electric Vehicle Infrastructure Program, which provides $5 billion in the 2021 Bipartisan Infrastructure Act funds. This move is legally suspicious and can be ruled in court.
The study also found that cost is a major obstacle to electric vehicle adoption. This conclusion is backed by China's development, where two-thirds of electric vehicles are already cheaper than their internal combustion equivalents, and sales of electric vehicles are soaring. Model Industry Innovation’s 2022 paper found that although EV prices are still rising to some extent in the U.S., “In most states, financing and owning electric vehicles are more expensive than financing and owning equivalent gasoline vehicles and owning EVs The price is cheaper. “As the fact that the AAA analysis found, electric vehicles' fuel and maintenance costs are about $1,000 less per year than gasoline fuel equivalents.
More and more automakers are planning to introduce affordable electric vehicle models in the near future. But if Congress abolishes the EV tax credit, it could slow their adoption in the U.S., further cutting leadership in this critical clean technology market to reach China.
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