Over the past few years, electric vehicle (EV) manufacturing facilities producing lithium batteries and EV car parts were proposed across the United States due to tax credits and grants from the Biden climate bill, the Democrat-passed Inflation Reduction Act (IRA). Vehicles qualified for a $7,500 IRA tax credit based on their American-made parts and minerals, and companies could get additional funds if they manufactured batteries domestically. According to data from Atlas Public Policy, a policy research group, however, those projects are being canceled. More projects were canceled in the first quarter of 2025 under Trump’s presidency than in the previous two years combined. Those cancellations include a $1 billion factory in Georgia that would have made thermal barriers for EV batteries, a $1.2 billion lithium-ion battery factory in Arizona, a transmission cable factory in Massachusetts, and an EV component factory in Georgia. Canceled manufacturing projects through the first two and a half months of 2025 totaled about $8 billion, far exceeding the $1.6 billion terminated last year.
Besides the IRA subsidies, the Biden administration enacted rules on car tailpipe carbon dioxide emissions, which effectively constituted an EV mandate, further benefiting these projects. The regulation and IRA subsidies are being overturned by the Trump administration and Congress, allowing Americans to choose the vehicle that best fits their needs without government intervention. According to a recent report from Princeton University, those changes could cut projected EV sales in 2030 by 40 percent.
Companies Pulling Back
Aspen Aerogels, the company behind the $1 billion factory in Georgia, is shifting its manufacturing to an existing U.S. factory and to Mexico and China, the latter of which has a 50% EV penetration rate. Battery maker KORE Power received conditional approval in 2023 for an $850 million loan to build a factory in Arizona, but is abandoning that plan and will retrofit an existing factory. Some projects were closed due to bankruptcy filings, as is the case for Nikola Motors and Canoo, both EV start-ups.
Furthermore, projects that are continuing to move forward are transitioning from all-electric vehicles to also include hybrids. For example, Hyundai’s multibillion-dollar manufacturing plant in Savannah, Georgia, recently announced a shift of this kind. Ford, GM, and Volvo have all slowed some EV plans and are also focused more on producing hybrids. As EV sales grew more slowly than companies had anticipated, hybrids gained momentum. The percentage of Americans who own or are interested in owning an EV has dropped eight points since 2023, according to a Gallup poll. The decline predates Trump’s presidency, with more companies deciding to pull the plug when he assumed office.
There is also a sharp decrease in new facilities targeted towards “green” or “clean” energy coming online. According to E2, a clean energy advocacy group, in January, $176 million in “clean manufacturing” projects was announced, significantly lower compared to a typical month, which would have had around $1 billion in new investments. Trump’s tariffs are having an impact, as facility owners are uncertain about the cost of their future input needs. Trump also implemented a 25% tariff on imported cars.
Even in Europe, companies are having trouble, with the most noticeable being Sweden’s Northvolt EV battery company, which filed for bankruptcy despite a $5 billion loan from the EU. Northvolt faced numerous challenges, including rising capital costs, geopolitical instability, supply chain disruptions, and shifts in market demand. In Europe, 11 out of 16 planned battery factories have been delayed or canceled as EV demand has waned and manufacturers are struggling to master the technology.
As a result, Europe is increasing its reliance on China, which already has 80% of the world’s lithium-ion battery market. China’s CATL and BYD have had a years-long head start in the technology and are selling batteries at very competitive prices. CATL, which became the world’s largest battery maker in 2021, employs 21,000 engineers in research and development, and BYD introduced its first electric car in 2008 — almost 20 years ago. China’s focus on electric vehicles is partly driven by its limited domestic oil and gas resources, which it must import, and its massive fleet of coal-fired power plants, which provide inexpensive energy to its manufacturing sector. China’s leadership in manufacturing“green technologies” has come by burning more coal than the rest of the world combined every year.
Conclusion
Companies are canceling their EV battery and parts factories as President Trump has become president and is planning to cut federal subsidies and reverse Biden administration regulations that would have essentially mandated electric vehicles. With waning U.S. sales of electric vehicles, car companies are turning to produce hybrids and fewer electric vehicles. Even companies in Europe are having problems, as Chinese companies have had a years-long head start with government support from Beijing. China has 80% of the world’s lithium-ion battery market and a notable lead in EV manufacturing, which is supported by its massive fleet of inexpensive coal-fired power plants.
