Key Takeaways
Wood Mackenzie is estimating that market factors and President Trump’s executive orders calling for a reexamination of policies for EV adoption in the United States will slow earlier projections of rapid growth.
Wood Mackenzie found a combination of removing EPA waivers allowing California and other states to force consumers to buy electric vehicles, reinterpretations of generous Treasury treatment, and other tax changes could drop EV sales from an earlier predicted 32% of sales by 2030 to 23%.
Higher costs related to input components and growing concerns over China’s dominance over EV supply chains could raise costs for batteries and other components, making electric vehicles even more expensive.
Consumers have been moving away from all-electric vehicles towards more utilitarian cars that fit their diverse needs.
President Donald Trump’s recent executive orders in “Unleashing American Energy” will have wide-ranging impacts on subsidies — from people buying electric vehicles (EVs) to funding for EV charging stations — as well as trade tariffs on imported raw materials. According to a report by Wood Mackenzie, Trump’s executive actions could reduce the market share of EVs by 28 percent by the end of the decade compared to earlier forecasts. Trump’s order calls for eliminating subsidies and emissions waivers that could boost EV sales. The orders and related administration policies could lower the adoption rate of EVs. Hence, they will make up 23 percent of sales by 2030, rather than the Biden administration’s estimate of 32 percent due to its regulation on tailpipe emissions.
The Trump administration may remove the $7,500 consumer tax credit on electric vehicles or restrict its eligibility further than the Democrat-passed Inflation Reduction Act had planned. For instance, the Biden Treasury Department found a loophole in leased vehicles that allowed them to be eligible for the credit, broadening the number and type of vehicles covered and including some foreign-made models. While any change in eligibility or removal, which in part requires Congressional action, is yet to be determined, Wood Mackenzie does expect that any EV tax credits remaining after Trump administration action would contain stricter eligibility criteria around critical mineral sourcing to promote mineral security.
Further, if the Trump administration removes the EPA California waiver to mandate EV sales, it would eliminate zero-emission vehicle mandates in several states, including Washington and Oregon. In California, it would be significant due to the size of its vehicle market. Wood Mackenzie estimates it would impact 30% of the U.S. light vehicle market. California Governor Gavin Newsom has announced a program to use state taxpayer money to continue the EV subsidies that President Trump has promised to stop and intends to sue the federal government if it does not allow the state a waiver to force Californians to buy electric vehicles. However, this would prove very expensive for the state.
Trump could also affect the U.S. Postal Service’s (USPS) plan to acquire at least 66,000 battery-electric delivery vehicles by 2028 to replace its aging fleet. The Democrat-passed Inflation Reduction Act allocated $3 billion to help the U.S. Postal Service purchase electric trucks and build charging infrastructure. The Postal Service, after conducting its own analysis, initially rejected electric vehicles due to concerns over cost and practicality. Yet, under pressure from the Biden Administration and EV advocates, the USPS caved to demands to go electric. Despite the $3 billion investment, only 93 electric trucks have been delivered, far short of the 3,000 expected initially. The Postal Service is also set to acquire 60,000 Next Generation Delivery Vehicles, most of which will be electric, from Oshkosh, a company known for manufacturing military and heavy-duty vehicles. The nearly $10 billion project has faced production delays and supplier conflicts that have hindered timely delivery. President Trump is reportedly considering canceling contracts aimed at electrifying the USPS fleet.
A year ago, the Biden administration announced $623 million in grants to build at least 500,000 publicly available chargers by 2030. The Bipartisan Infrastructure Law had allocated $2.5 billion in spending for a Charging and Fueling Infrastructure (CFI) Discretionary Grant Program. The CFI competitive funding program complemented the $5 billion National Electric Vehicle Infrastructure (NEVI) formula program to help build high-speed EV chargers along the nation’s highways. Trump’s recent executive order demands a 90-day pause to review CFI and NEVI.
Biden’s $7.5 billion EV charging stations program, which promised half a million installations, had over 499,990 to go after three years. President Biden signed the Bipartisan Infrastructure Law in November 2021, allocating $7.5 billion for electric vehicle charging, of which $5 billion was dedicated to NEVI. Just seven electric-vehicle charging stations had begun operating with that $5-billion funding by mid-2024, despite automakers and others indicating that drastically expanding EV-charging stations was crucial to the wide deployment of electric vehicles, which was part of Biden’s climate change program. The seven EV-charging stations deployed consisted of a few dozen total charging ports. The EV charging program faced many delays due to Biden’s executive orders issued early in his term that forced social engineering mandates and requirements upon federal funding programs.
According to the Wood Mackenzie report, $3.2 billion has been apportioned to states for EV charging, but only $600 million has been awarded in contracts for over 4,500 charging ports. While contracts already awarded to suppliers may not be affected, $600 million is only 19% of the total funding. The Biden administration increased award announcements in the fourth quarter of 2024 — its last full quarter — as many states were concerned about the future of NEVI funding. The report indicates that NEVI-funded ports accounted for only 126 of the 14,000 new ports in 2024, or just 0.9%.
The expected tightening of the EV tax credit will reduce EV purchases and EV batteries, reducing demand by around 20%. Wood Mackenzie’s base case forecast predicts that the annual U.S. EV and energy storage system battery demand will increase to over 500 gigawatt-hours by 2030. Still, another scenario indicates it could be closer to 400 gigawatt hours.
Raw materials used to manufacture EV batteries currently come primarily from China. With a potential 60% import tariff on battery components from China, Wood Mackenzie sees prices of battery cells increasing by 29% and cathode prices by around $10,000 per ton. The result will be higher EV prices on top of a reduced subsidy, reducing sales further. The higher prices could make domestic or friendly nation supply more attractive, but the Trump administration recently added tariffs to Canadian and Mexican imports. The United States imports around 50% of its refined nickel from Canada. While the United States, in theory, could replace Canadian imports, the metal is difficult to source elsewhere in the form needed, and the Biden administration stopped proposed nickel mines in Minnesota to appease environmental activists. Moreover, nickel is used extensively in the aerospace sector — an industry where switching suppliers is lengthy. Wood Mackenzie expects imports to continue despite the tariffs and increasing costs.
Conclusion
Wood Mackenzie expects future EV sales to be less than the Biden administration’s expectation due to President Trump’s executive order on energy. By 2030, it expects EV sales to be 28% less than the Biden administration’s expectation, which would have resulted in EV sales 9 percentage points higher. The Biden administration’s regulation on tailpipe emissions led to an expected 32% share of EV sales in 2030, but Wood Mackenzie now expects those sales to garner a 23% share. The Wood Mackenzie projection is based on Trump administration changes to EV subsidies, including removing or restricting federal tax credits, revoking a waiver for California’s EV mandate, canceling the postal service’s EV program, and withdrawing funding for the EV charging program.
