After taking office, U.S. President Donald Trump quickly moved to adjust the electric vehicle (EV) policies of the previous Biden administration. He directed federal agencies to suspend funding under the 'Inflation Reduction Act' and the 'Infrastructure Investment and Jobs Act' and plans to eliminate the federal EV tax credit of up to $7,500 per vehicle. At the same time, the administration also intends to relax fuel economy standards. This series of measures could lead to a slowdown in the U.S. EV market and impact automakers' long-term strategic plans.

Since the 'Inflation Reduction Act' took effect in 2022, the U.S. EV market has grown rapidly under policy incentives. According to automotive research think tank 'Atlas Public Policy', automakers and component suppliers have invested $116 billion in EV production in the United States. The 'Inflation Reduction Act' has not only been a key pillar of the U.S. EV supply chain but is also considered an important tool for competing with China’s new energy vehicle industry.

Driven by policy support, U.S. EV sales have increased year after year. In 2022, growth reached 65%, while in 2023, the rate slowed to 49%, but annual sales still exceeded one million vehicles. In 2024, growth further declined to 7%, yet 1.3 million units were still sold. The $7,500 tax credit has played a crucial role in this growth, making EVs more price-competitive with gasoline cars and attracting more consumers.

However, the Trump administration's plan to eliminate these incentives could reduce EV price competitiveness, dampening consumer enthusiasm. At the same time, automakers and suppliers will face a more uncertain market environment, potentially forcing them to adjust investment plans.

Amid uncertainty over the new policy direction, some automakers have already slowed or modified their electrification strategies. Ford canceled plans for an electric three-row SUV and instead launched hybrid models, while General Motors delayed production at its EV battery plant. For automakers, the removal of subsidies and the relaxation of fuel economy standards could prompt them to reassess EV investment returns and, in the short term, shift toward the more stable gasoline or hybrid vehicle market.

In the short term, EV sales may see a surge as consumers rush to purchase vehicles before the tax credit is eliminated. However, in the long term, market growth sustainability will be challenged. If EV costs do not decrease rapidly and gasoline cars remain more attractive in price, consumers may revert to traditional fuel-powered vehicles.

The U.S. transportation sector is a major contributor to greenhouse gas emissions, with light-duty cars and trucks accounting for more than half of the total. The Biden administration’s EV policies were seen as a key means of reducing carbon emissions, but the Trump administration’s adjustments could make achieving emission reduction targets more difficult.

Additionally, environmental organizations and related interest groups may launch legal challenges against these policy changes, seeking to prevent the subsidy repeal and the relaxation of fuel economy standards. This policy battle not only concerns the future of the U.S. EV market but could also affect the competitive landscape of the global automotive industry.

The Trump administration’s plan to eliminate EV subsidies and ease gasoline vehicle regulations has introduced new uncertainties into the U.S. EV market. In the short term, consumer demand may accelerate as buyers rush to take advantage of existing incentives, but in the long run, market demand may slow, and automakers’ investment strategies will be impacted. At the same time, U.S. environmental goals may suffer setbacks, and policy changes could trigger legal disputes. Against this backdrop, the future trajectory of the U.S. auto industry remains uncertain.