Among his Day One executive orders, President Donald Trump declared that his administration would eliminate what he called “the ‘electric vehicle (EV) mandate,” and “promote true consumer choice” by terminating regulations and subsidies that he claimed make EVs too affordable compared to combustion-engine cars.
That order could undermine efforts to decarbonize cars and trucks, which is necessary if the world is to reach net zero emissions. Road transportation accounts for 12% of global and 22% of American climate pollution. Electric vehicles (EVs) have emerged as a relatively climate-friendly alternative to fossil-fueled cars, producing far lower emissions due to their high efficiency. And as power grids shift to cleaner and more efficient electricity sources like solar and wind, the climate case for EVs will only become stronger.
Global EV sales have surged as prices have fallen and countries have implemented policies like regulations and subsidies to encourage their adoption. In 2019, 2 million EVs and plug-in hybrids were sold, accounting for just 2.5% of global new car sales. In 2024 the number skyrocketed to over 17 million, accounting for more than one in five new passenger cars sold last year.
But last year’s global EV sales growth was uneven. It came mostly in China, which sold 11 million EVs and plug-in hybrids. That represents a 40% increase from the prior year, accounting for nearly two-thirds of all worldwide sales. Europe came in second with 3 million, or 18% of new EVs, but sales there declined 3% from the previous year as some government incentives expired. North America accounted for 1.8 million, or just over 10% of global EV sales, but saw only a modest 9% increase in 2024. In the rest of the world, EV sales grew rapidly to 1.3 million, 27% higher than in 2023.
The International Council on Clean Transportation forecasts that global climate pollution from road transportation will peak this year and then begin to decline, thanks largely to the adoption of EVs. But the political climate in countries like the U.S. remains a potential stumbling block.
The Trump effect on U.S. EV sales
The Trump administration is taking aim at both regulations and government incentives that encourage the adoption of EVs.
Among the relevant regulations are the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy, or CAFE standards. They require that automakers’ average vehicle sales meet a certain miles-per-gallon efficiency. Immediately after his confirmation by the Senate as the new Secretary of Transportation, Sean Duffy signed an order to ‘review and reconsider’ all CAFE standards.
The Environmental Protection Agency, or EPA, also published stringent average vehicle tailpipe emissions standards last March. Because EVs don’t have tailpipes from which to produce emissions, automakers can most easily meet those standards by increasing EV sales. The Agency’s new administrator Lee Zeldin will likely order a review and revision to these rules as well. The Republican-led House of Representatives voted last year to repeal this rule and bar the EPA from imposing future vehicle pollution regulations, but the Senate didn’t take up the bill.
The EPA also issued California with two waivers in December, allowing the state to set more stringent vehicle pollution standards and to require that an increasing share of new instate passenger vehicle sales be EVs and plug-in hybrids, reaching 100% by 2035. Thirteen states plus Washington D.C., who together with California account for more than one-in-five new U.S. passenger car sales, have adopted California’s EV mandate.
The aforementioned executive order called for “terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles.” During the last Trump administration, the EPA revoked California’s waiver in 2019, and California sued. The Biden EPA reinstated the waiver in 2021 before the lawsuit had been resolved. According to the California Air Resources Board, “The Clean Air Act does not allow waivers to be revoked.”
In an interesting wrinkle, many automakers don’t sell enough EVs to comply with regulations, and thus have to buy credits from companies with extra EV sales like Tesla. E&E News reported that nearly one-third of Tesla’s profits over the past decade have come from selling these compliance credits, and Tesla previously lobbied to preserve California’s programs. The company’s chief executive Elon Musk is playing a large role in the Trump administration including attempts to freeze federal funds and fire federal workers.
The Inflation Reduction Act also implemented federal EV subsidies up to $7,500. Although the executive order and Musk have called for their elimination, only Congress can modify the tax code. The credits can also be transferred to participating auto dealers, who can then immediately reduce the sales price – a process still functioning as of early February despite the chaos of federal funding freezes.
Many Congressional Republicans have called for the elimination of the EV tax credits. But their made-in-America requirements have spurred hundreds of billions of dollars of investments in domestic battery and EV manufacturing supply chains, predominantly in districts represented by Republicans in the South and Midwest. One recent paper estimated that eliminating these tax credits would reduce U.S. EV sales by around 20% between now and 2035, which could imperil many of the jobs and local tax revenue generated by those manufacturing facilities.
Regardless of what happens with EV regulations and policies, experts forecast that the EV share of new U.S. passenger car sales will continue to rise. After growing rapidly from 2020 to 2023, their sales growth cooled in 2024 as an increasing number of Americans opted instead for traditional hybrids. Cox Automotive predicts that the EV and plug-in hybrid share of new American car sales will rise modestly from 9% in 2024 to 10% in 2025, with standard hybrids accounting for another 15% of the market.
Tesla’s decline and China’s ascendancy
Tesla’s vehicle sales fell last year, for the first time since 2011. The company nevertheless accounted for 48% of new U.S. EV sales in 2024, but that was down from 55% in 2023 and 64% in 2022.
Some of that decline may be due to Elon Musk’s polarizing behavior. In a survey conducted by Electrifying.com, nearly 60% of current and prospective EV owners said that Musk’s controversial reputation actively puts them off buying a Tesla. Similar reactions to Musk and Tesla appear to be reflected in recent European EV sales numbers.
Globally, Tesla has long been the leader in sales of fully electric cars, but Chinese automaker BYD is on the verge of taking that title. And BYD additionally sells nearly as many plug-in hybrids as fully electric cars; Tesla only sells fully electric vehicles.
Chinese EVs haven’t entered the U.S. auto market thanks in part to a 100% tariff. But half the new passenger car sales within China are now electric, and their EV exports to many other countries have also been rising.
The factors that will determine how fast EV adoption proceeds
Studies published in 2021 and 2023 found that insufficient public charging infrastructure is a key barrier to more widespread EV adoption. That infrastructure has been expanding at an accelerating rate in the U.S., but the Trump administration is trying to freeze funding for the National Electric Vehicle Infrastructure Program, which was provided with $5 billion in funds in the 2021 bipartisan infrastructure bill. That move is legally dubious and may be decided in the courts.
The studies also found that cost was a top barrier to EV adoption. That conclusion is supported by developments in China, where two-thirds of EVs are already cheaper than their internal combustion equivalents and EV sales are surging. A 2022 paper from the modelers at Energy Innovation found that in the U.S., although EV sticker prices remain somewhat elevated, “in most states, financing and owning an EV is cheaper on a monthly basis than financing and owning an equivalent gasoline car.” That’s aided by the fact that as a AAA analysis found, fuel and maintenance costs for EVs are about $1,000 per year lower than gasoline-fueled equivalents.
More automakers are planning to introduce affordable EV models in the near future. But if Congress repeals the EV tax credits, that could slow their adoption in the U.S
