The EV tax credit is dead, while car manufacturers are preparing for a shock for American production dreams

The end of the subsidy is a structural shock that already waved upstream: battery manufacturers are faced with an American growing surplus and the factory plans departures, undergoing declared overhaul ambitions and setting up a risk of whip of future shortages if the capacity is too deep.

Ford CEO Jim Farley, speaking on Tuesday at the Summit Ford Pro Accelerate in Detroit, said that he saw an enormous impact on the change in politics. Although he always sees electric vehicles to be a “dynamic industry” in the future, it “will be smaller, much smaller than we thought”. He described the end of the consumer’s incentive of $ 7,500 a “changing game” and said that he would not be surprised if sales of electric vehicles in the United States drop 5% from the current level industry of around 10% to 12%. The most recent forecasts for JD Power and GlobalData estimated that electric vehicles would represent 12.2% of new vehicle sales in September 2025.

Farley reminded the public that he always says: “Customers are annoying. They surprise you. ” And what he learned is that “customers are not interested in an electric vehicle of $ 75,000. They find them interesting. They are fast. They are effective. You are not going to the service station. But they are dear. ”

The good news for car manufacturers, has added Farley, is that “partial electrification is more interesting for customers than we think … We think that hybrid, EV plug-in, e-meets, that kind of partial electrical solutions, America will fall in love or already falling in love.” And they fall in love with electric game electric vehicles, he hinted.

What just happened

• Federal incentives – up to $ 7,500 for new electric vehicles and $ 4,000 for the occasion – finished after September 30 under the legislation advanced by the legislators of the White House and the GOP, removing the point of sale which had directly lowered the prices of the transactions since 2024.
• A last-minute wave made the request forward in August-September, analysts now expect an air pocket in the fourth quarter, prices actually increase by the amount of credit before and that consumers stop to reassess value and funding.
• Some OEMs and dealers try to extend the value via rental constructions that capture remaining credit mechanics until the end of 2025, but these are provisional measures, and not a reintegration of the federal program for retail purchases.

Outlook of car manufacturer

• The short -term short -term gaming book emphasizes the defense of margins: EV production ramps slowly, the priority of versions with clearer profitability and the mixture of rebalancing to hybrids where sensitivity to consumption prices is lower and the compliance pressure accumulates without federal thrust in electric vehicle.
• Ford and GM deploy the rental of captivity finance to temporarily switch to savings equivalent to credit, seeking to maintain traffic in exhibition halls while avoiding post-key inventory overhangs; This supports volume stabilization but compresses the finance margins and cannot completely replace a subsidy on a national scale.
• Tesla, Rivian and other EV -Cure games are faced with the elasticity of the most direct demand, lacking in ice or hybrid hedges; The objective of investors turns to price flexibility, cost reductions and export optionality because the interior “natural demand” is tested in the absence of incentives.

Price and request

• With the disappeared subsidy, the effective prices of electric vehicles increase compared to the ice, especially in the segments where battery costs still bear a bonus of several thousand dollars; Manufacturers can respond with selective discounts, but these will vary the model by model and will probably not compensate for full credit loss.
• Analysts expect the US EV market share to decrease less than 10% in the short term while the post-diadline grant takes place, even if 2025 still mark a year of record sales due to the rush; The key question is the speed with which elastic demand returns as the OEMs recalibrate prices and versions.
• The hybrids are positioned to gain part as a familiar bridge technology with lower initial costs and less load anxiety, aligning with the priorities of the OEM margin and the lighter compliance diet.

Supply chain and batteries

• Fortune Indicates an excess of American battery emerging while the request EV slows down, with an estimate of the deployment of the domestic battery of Bloombergnef until 2030 in relation to pre-polician expectations; Cancellations and delayed factory plans increase the risk of a future snapback and price volatility if demand bounces.
• Experts warn against a boost: today’s surplus can be transformed into the shortage of tomorrow after capacity reductions, complicate cost curves and undermine the essential learning benefits for long -term competitiveness against ecosystem on the scale of China.
• The political combination – EV credits while relaxing other regulatory pressures – reduces the incentive to OEM inherited to push the volume of electric vehicles, more cooling short -term investors, even if global competitors continue the cost cycles.

What to look at

• Price and incentives: discipline of OEM delivery compared to the defense of sharing, and how the rental passes evolve after the end of the year.
• Mixture of models: faster hybrid launches and delayed EV versions, especially in cross -ground crossings and trucks where affordability is binding.
• Supply chain: Any reversal of canceled battery projects or pivotons in stationary storage to absorb capacity and stabilize use.
• Policy: Incitations at the level of the State and Federal Future Potential Adjustments because the data of the fourth quarter clarify the real “natural demand” without subsidies.

For this story, Fortune Used a generative AI to help an initial project. An editor checked the accuracy of the information before the publication.