Trump’s EV tariff uncertainty clouds 2025 forecast for car companies

Global sales of battery electric vehicles are expected to reach 15.1 million in 2025, marking a 30% jump, according to S&P Global Mobility. Battery electric vehicles are expected to make up 16.7% of the market share for light vehicles.

However, Tesla, BYD of China, and other manufacturers face big unknowns in 2025 as Donald Trump’s presidency could mean big policy shifts in tax and other incentives for both electric vehicle makers and consumers, the research report suggests. It points out that the threat of tariffs on imports and retaliatory tariffs globally, could further complicate production and sales for electric vehicles.

“There’s just a lot of uncertainty in the air”, Stephanie Brinley, associate director of auto intelligence at S&P Global Mobility, said. “It’s not an environment where you want to necessarily go gangbusters.”

In the US, consumers can currently claim a federal tax benefit of up to $7,500 (€7,282) for certain new electric vehicles. Car makers also benefited from some federal support for electric vehicle production and infrastructure. It’s possible for all of that to get cut under President Trump.

Trump condemned the federal tax credit for electric vehicles while campaigning for the presidency. He called it part of a “green new scam” that would hurt the auto industry. Still, the incoming administration is expected to push for broader deregulation of industries, which could potentially help car makers.

Some of the larger electric vehicle makers had a mixed 2024 even with benefits for consumers and manufacturers. Tesla sales slipped 1.1%, its first annual sales drop in more than a dozen years. Rivian’s deliveries rose 2.9%.

Tariffs are another threat to the industry. Production takes place globally, with parts getting imported and exported throughout the process. Trump has threatened to tax imports from Mexico, Canada, China and elsewhere, which would be likely to result in retaliatory tariffs.

China is the largest market for electric vehicles, followed by the US. Within the US, Tesla is the dominant electric vehicle maker, with about 50% of the market share.

Car makers are in a wait-and-see position along with many other industries to see whether Trump carries out the threat of rescinding tax credits and implementing tariffs.

The broader auto industry is proceeding with caution. Overall, S&P Global Mobility expects that light vehicle production will have slid 1.6% in 2024 and will fall another 0.4% in 2025.

That’s a result of car makers better matching production and demand. Overall light vehicle sales are still expected to rise 1.7% in 2025.

The ongoing transition to electric vehicles also plays a role in more tempered production. Companies like Ford and General Motors are shifting production capacity to electric vehicles in some cases instead of adding more capacity.