Decision to halt EV purchase incentives and kill planned emissions rules has negated billions in investment
In the past few months, car makers with exposure to the US market have written off the equivalent of £37 billion, or roughly what the UK has spent so far on HS2.
Mainly this is because the US government under president Donald Trump has gone into hard reverse on EVs.
The decision to halt EV purchase incentives and torch planned emissions legislation has effectively stranded billions of dollars of investments made by the likes of Ford, General Motors, Stellantis and the Volkswagen Group.
Seeing no path to profitability for projects in which billions have already been spent, the companies felt they had no choice but to write off the money.
EVs in the US have been vilified by a president who believes the idea of climate change and renewable energy is a “green scam”.
Political parties and their voters have always disagreed on core issues, but this new polarisation in politics has had disastrous effects on investment in the automotive industry.
Car makers require stability and predictability above all else. Those looking to localise a platform in a particular region want years of visibility on regulations to ensure that their investment has a fighting chance of being profitable. ‘Just tell us where to go in good time and we will get there’ is still the rallying cry of industry associations everywhere, even if the timing and details are hotly debated.
Guiding them towards a cleaner propulsion system would in an ideal world be fairly uncontroversial. The benefits of fewer emissions while reducing reliance on energy sources subject to global volatility shouldn’t provoke strong debate – but electric cars have become a lightning rod in this new polarised world.
Politicians on the left have been guilty of seeing them as a panacea without fully grasping the seismic shifts they enact on supply chains. Those on the right gleefully hold them up as everything wrong with the left and lure voters not keen on change with the promise of reversing EV mandates.
Any such reversal is bad news for the car industry. The giants can afford to back out of expensive investments but plenty of smaller companies get hurt. They make further job cuts and cut capital expenditure in new technologies, leaving the path clear for ever more Impressive replacements from China – a country that has long understood the benefit of long-term investment plans.
