If The US Backpedals On EVs The Auto Industry Is Lost

The automotive industry is in the midst of a messy and difficult transition period, shifting from 100 years of internal combustion to cleaner and more efficient battery electric vehicles. The U.S. auto industry has a choice to make in this: to keep developing new BEV technology, or be left behind by the rest of the world and slowly collapse. In a recent interview with InsideEVs, LG Energy North America President Bob Lee equated this tipping point to the transition from sailing ships to steam powered vessels in the late 1800s. “The writing is on the wall,” Lee said. “Nobody is investing in better sails.” The message is clear, if you’re not all-in on EVs, you’re toast. 

Over the last two decades the U.S. automotive market has lost its footing as the largest in the world and no longer holds the chips it once did, an issue exacerbated by the current administration’s global trade policy. While America’s so-called Big Three once all-but controlled the export car markets in the global south, these markets are now dominated by Chinese automakers; the formerly prosperous American brands have retreated upmarket, catering nearly exclusively to buyers in North America.

With the government also pressing the rewind button on a plan for clean energy and an electric automobile future, and slowing (though still rising) EV adoption rates, automakers are walking back their previously aggressive electrification plans. Lee and I agree, this is a massive mistake and detrimental to the future of the industry. 

“If [the U.S. auto industry] decides not to do EVs, if we decide we’re going back to internal combustion, and the rest of the world is moving on to cleaner things, what is the rest of the world going to buy?,” Lee continued. “If we’re not the ones out there investing and building that next technology, then I think the risk is serious.” If we continue to walk down this path, he concludes, “we lose the auto industry.”

By eliminating a lot of the pro-EV policies enacted by his predecessor Joe Biden, President Trump risks imploding a multi-trillion dollar sector of the U.S. economy. Trump has pushed for an end to all federal EV credits, cut investments in EV charging infrastructure, ordered existing EV infrastructure to be shut down and ripped out, and pushed for less stringent fuel economy regulations. And that’s before we even begin talking about Trump’s signature policy, import tariffs on the country’s most important trade partners, which have already driven significant inflation and pushed the country’s economic position into a tailspin. These actions have driven rising consumer anxiety, causing many large corporations to pause investments until they can figure out how they’ll be affected. This includes big moves, like General Motors abandoning its stake in a joint battery plant with LG, and other automakers pushing their new plant investment out on longer timelines. 

Lee couldn’t be more clear about his position: even a short pause could spell disaster for the U.S. auto industry and, by extension, the U.S. economy. Every minute we spend not investing in the future, the U.S. is losing to innovators and movers in China who are gaining favor with former U.S. trade partners.