The country’s automotive future doesn’t look as electric as carmakers had once hoped. But it doesn’t mean the EV industry is entirely dead.
On Monday, Ford Motor Co. announced that it’s taking major steps to pull back on its EV-focused business road map. The automaker is scrapping plans to produce a new electric truck, repurposing an EV battery plant to produce storage for the grid, and converting its fully electric F-150 Lightning into a hybrid.
It’s also planning to expand its gas and hybrid options. The strategy shift away from fully electric vehicles will cost the automaker $19.5 billion.
Ford’s stock has been mostly flat since the news was announced, with shares trading down roughly 0.11% as of late Tuesday afternoon.
The move may seem like an indictment against electric vehicles at large. It may also seem counterintuitive given that EV sales in the U.S. hit record highs this year.
But experts say it illustrates the specific headwinds that EV makers have faced in the U.S. this year, and the challenges of scaling an emerging technology.
Tax credits and tariffs
Manufacturing vehicles in the U.S. has become increasingly expensive, due in part to higher labor costs, stricter environmental regulations, and supply-chain issues. And a more expensive manufacturing environment means more investment risk.
In 2025, it became even more challenging. “A lot of things designed to mitigate that risk have been unwound,” says Albert Gore, executive director of the Zero Emissions Transportation Association (ZETA), a coalition advocating for EV advancement.
President Trump scrapped federal tax credits for EVs and enacted sweeping (and at times unpredictable) tariffs. He also rolled back fuel economy standards and generally added immense uncertainty to every investment decision in U.S. manufacturing.
“The cost of doing business in the U.S. has gone up significantly,” Gore says.
Ford’s announcement even speaks to this, noting that “regulatory changes” have affected its EV plans.
Profitability concerns
Ford’s situation in this landscape is unique in part because of the specific type of EV it offers. Ford’s flagship EV was its F-150 Lightning, a full-size pickup that came with a steep price.
Though the F-150 Lightning was announced in 2021 with a price of $40,000, once production began, that cost increased. The 2025 F-150 started at around $55,000, though other versions came in even higher; the F-150 Lightning Platinum, for example, starts at around $85,000.
Ford had been struggling with its EV profitability for a while; it was losing money on every EV it sold, even at the start of 2024.
And though EV demand has been strong—Gore says that for the past 15 years, EV demand has “far exceeded industry estimates”—price is an important component of that demand.
In general, the U.S. auto market focuses on SUVs and trucks, which have higher average transaction prices than sedans. That impacts U.S. consumers, who have been facing increasing costs in multiple sectors, including groceries and electricity.
It also makes it more challenging for U.S. companies to compete internationally. In 1960, about 52% of global automotive sales were U.S.-made vehicles. Today, it’s around 11%, and falling.
Some of that is just because the rest of the world is growing its manufacturing, Gore notes. But “some of it is the way that cars made here for this market have changed in a way that places them somewhat out of step with the rest of the world.”
Ford isn’t totally giving up on EVs, though. The automaker’s changing strategy is specifically about no longer producing “select larger electric vehicles where the business case has eroded due to lower-than-expected demand, high costs, and regulatory changes,” the company has said.
So while it has scrapped the F-150 Lightning, it still has plans to make smaller, affordable models, as well as expand its hybrid and extended-range EVs.
EVs need scale—and China is dominating
In order for EVs to be profitable, production needs to reach a certain scale. But these factors—vehicle type, as well as shifting trade and tax policies—hinder automakers’ abilities to do so.
And EVs are still somewhat nascent, at least compared to internal combustion vehicles.
“Manufacturing new power train vehicles is hard,” Gore says, “and particularly takes economies of scale that have been achieved over a century with internal combustion vehicles, but are just now starting to be achieved in the U.S. with electric vehicles, within the last seven years or so.”
About 1 out of every 4 vehicles sold around the world in 2025 will be an EV. But right now the market is dominated by China, which accounts for about 70% of global EV production.
China has come to own the global EV industry in part because of its technological advancements, specifically around battery innovation—and its ability to make ultra-affordable EVs.
Some Chinese EVs start as low as $10,000; Ford CEO Jim Farley himself test-drove (and loved) a Xiaomi SU7, which retails for around $30,000.
China’s EV success reveals just how far behind the U.S. is when it comes to EV advancements. And though China’s dominance isn’t quite affecting the U.S. car market—former President Biden imposed 100% tariffs on Chinese EVs as a way to protect American auto manufacturing—it is having global impacts.
The European Union is abandoning a ban on combustion vehicles after automaker pressure, Bloomberg reported on Tuesday, giving more time for automakers to go electric. The move comes as European carmakers face increased competition from China, as well as steep tariffs from the U.S.
EV consumer sentiment is hit—but there’s hope
Another factor playing into the complicated EV landscape, particularly in the U.S., is the changing consumer sentiment around the technology. EV sales did hit a record high in the U.S. this year, but that was likely influenced by consumers racing to qualify for the federal tax credits before they expired at the end of September.
A recent study by CDK Global found that EV interest among gas car drivers dropped 20%. When asked if they will buy an EV in the future, 31% of gas drivers said yes in 2024, compared with 11% in 2025.
Interest even dropped among hybrid drivers, 54% of whom said in 2024 that they would switch to an EV in the future, compared with 35% in 2025.
Gore wasn’t involved in that survey, but he points out that the conversation around EV’s has become increasingly politicized. “The rhetoric is, by its nature, extremely negative, and it’s loud,” he says.
That can affect EV adoption, particularly for a technology that needs to vie for mainstream appeal. Early adopters drove EV’s initial surging growth, but then the industry has had to figure out how to attract everyone else who isn’t as invested in being a front-runner.
But Gore isn’t concerned about the long-term appeal of EVs. “That’s something that has been absolutely consistent, that regardless of what anyone’s heard, the experience of driving an EV is overwhelmingly positive, and the same with owning one,” he says.
Though EV sales dipped 1% in North America this year compared with 2024, they’re still up 24% globally.
Despite the challenges the EV industry faces in the U.S. and abroad, experts like Gore are positive that there’s still plenty of market to reach—and that continued advancement, particularly in battery technology, means electric vehicles make sense for the future.
The U.S. EV industry has seen ups and downs before. And though it might be the right move, economically, for automakers to pull back on EV plans at this time, they risk falling behind if and when the market swings back.
“For people who don’t [scratch their EV plans], I think the reward will be a much bigger market than a lot of companies,” Gore says.