The U.S. auto industry is set to move into what many inside the business now call a pending “EV winter.” After several years of explosive growth and investment in electric vehicles (EVs), a downturn in demand, world and national economic tides veering away from EV-friendly policies and increasing costs are all conspiring to put the brakes on the electric-vehicle boom. What was once the future now is in danger of stalling — and there go far-reaching ripple effects on down from Detroit to Silicon Valley.
The single biggest surprise came at the end of September, when the federal government allowed to lapse a $7,500 EV purchase tax credit. That subsidy had long been driving buyers toward EVs. Sales jumped in August and September as consumers rushed to qualify before the deadline. But when the credit disappeared, so did demand. Industry executives warned almost immediately that sales could fall off a cliff — some predicted, at worst, that EV sales would slide to as little as 5 percent of all U.S. vehicle sales.
That warning was hardly hyperbole. In the United States, EV sales were down 49 percent in October compared with September. It’s not a fluke but rather a deeper structural headwind, dealers, automakers and analysts say. EVs are now much more expensive than gas autos. With prices higher and no subsidies, many buyers are balking.
The cost problem isn’t limited to sticker price. The pressures of supply-chain, tariffs on imported auto parts, growing cost of materials and chip shortages have made manufacturing EVs more costly — a cost that automakers are struggling to absorb. The math is starting to look shaky for many brands that had bet big, devoting huge resources to battery plants, creating EV models and marketing.
And it’s not just supply-side pain. The very picture of demand is changing fundamentally. As subsidies are reduced and prices rise, many consumers are moving back to hybrids or older internal-combustion models. For automakers, that could mean slowing or halting electric vehicle production, rethinking investments and even cutting jobs.
The big takeaway is that some of the biggest U.S. automakers are scaling back or delaying EV plans. Companies that had pledged all-electric lineups within a decade are hedging — plowing money into hybrids, or even gasoline vehicles, to remain flexible.
Dealers themselves are suffering. With the EV demand crashing, sellers are selling off inventory at deep discounts or even putting a full stop to their purchases of electric vehicles. Service-department revenue — a lucrative profit center for traditional auto dealers — is at risk as well, because EVs tend to require less maintenance.
It’s scary enough that some analysts now say the United States could start falling behind global competitors on electrification. In countries like China and in Europe, where governments continue to offer incentives for buying electric vehicles and infrastructure is being installed, the adoption of the devices is progressing more steadily. In the United States, however, that delicate blend of policy rollbacks and rising costs — exacerbated by a shrinking appetite for consumers — may leave the country behind, with consequences for climate goals and industry competitiveness and even long-term manufacturing strategy.
That is not to say that the EV moment has passed. Even for buyers willing to pay a hefty premium, EVs still have a couple of benefits they can offer: lower operating costs and maintenance needs; quieter driving; no tailpipe emissions; and the perception of being ready for the future. Affordable could again come, as battery prices tumble or used-EV markets evolve. But for now, the industry’s top companies seem to be rearranging furniture — regarding EVs as a special case rather than the default future.
For consumers, it’s one more changing perspective on what the “new normal” looks like. Don’t be shocked if electric models become niche once more, automakers slide the brakes on new EV introductions or hybrids and gasoline cars resurge in attention. The clean-energy vehicle revolution may not be dead — but in the United States, it’s slowly freezing to death.
