Under the Biden administration’s Inflation Reduction Act, the U.S. was on track to meet all its battery demand for electric vehicles from local manufacturing by the end of the decade. Now, the country may not reach that goal as billions of dollars worth of clean energy projects have stalled in Q1 2025. The U.S. is in a far better position to adopt EVs than before, but that momentum now risks stalling, as EVs become collateral damage in tariff wars, helping China further its lead.
Welcome to the Friday edition of Critical Materials, your daily round-up of news and events shaping up the world of EVs, software-defined cars and autonomy. Also on our radar today: There’s now an estimate on how much Japanese automakers will suffer from President Trump’s sweeping tariffs on imported goods. Plus, Toyota is rescuing its suppliers by offering to cover the high costs of parts from tariffs.
30%: Are America’s Clean Energy Programs Stalling?
Photo by: Hyundai
The simple answer is that some projects have stalled and others that have been completed are adjusting their plans for lower output and the fallout from Trump’s tariffs. The math is clear, until last year, about $1 billion worth of clean energy manufacturing projects were being announced every month in the U.S., according to clean energy advocacy group E2. That number plummeted to $176 million in January.
What’s happening? President Trump campaigned heavily to end the Biden-era investments in EVs, charging infrastructure and battery manufacturing, all aimed at reducing America’s reliance on China and moving away from planet-warming fossil fuels. After Trump took office in January, the investments started dropping.
The stalled projects include a $1 billion Aspen Aerogels plant in Georgia. The company, which won research grants from NASA and specializes in producing fire suppressants for EV batteries—including those that it supplies to General Motors—announced that it was shifting production to its other existing factories in the U.S., plus China and Mexico.
Battery company Kore Power, which planned to build a $1 billion plant in Arizona, killed that project in January, according to local news reports from Phoenix. Plus, Trump infamously froze the funding for the National Electric Vehicle Infrastructure (NEVI) program in his very first days in the White House. NEVI aimed to build out a fast-charging network in the U.S. across key highway corridors.
Here’s a deep dive from The Washington Post on the stalled projects:
“It’s hard at the moment to be a manufacturer in the U.S. given uncertainties on tariffs, tax credits and regulations,” said Tom Taylor, senior policy analyst at Atlas Public Policy. Hundreds of millions of dollars in additional investments appear to be stalled, he added, but haven’t been formally canceled yet.
In response, companies that had invested in manufacturing American EV parts are now pulling back and canceling projects.
However, several other OEMs have not only completed their EV manufacturing and battery plants but have also reinforced their commitment, even after Trump took office. Hyundai opened its $7.6 billion Metaplant Georgia last week, where the Ioniq 5 and Ioniq 9 electric SUVs are currently under production and more hybrids and EVs are expected to be added.
Hyundai is also building a $5 billion steel plant in Louisiana after Trump imposed 25% tariffs on imported steel and aluminum. Dozens of other projects, including Toyota’s battery plant in North Carolina, LG Energy Solutions plant in Arizona and Ford’s BlueOval Battery Park in Michigan, have either been completed or are still on track for production.
So, it’s not all doom and gloom.
But the U.S. isn’t anywhere near competing with China, where new energy vehicles (NEVs) already account for nearly half of the new vehicles sold. EVs accounted for 8.1% of America’s total vehicle sales in 2024, according to Cox Automotive. Now, protectionist policies and an anti-EV administration are making it even easier for China to extend its dominance.
60%: Tariffs To Cost Japanese Automakers $24 Billion: Report
Photo by: InsideEVs
The balance sheets of Japan’s automakers are on track to get rattled. The cost of tariffs for the country’s seven biggest car brands could exceed 3.5 trillion yen ($24 billion), Nikkei reported, citing data from UBS Securities. Toyota accounts for half of that, amounting to a whopping 1.8 trillion yen ($12 billion).
Here’s more from Nikkei this morning:
“Japanese car manufacturers will probably have to take some kind of action, such as transferring production to the United States,” said Kohei Takahashi, an analyst at UBS.
The Japan Automobile Manufacturers Association (JAMA) says more than 30% of all Japanese car exports in 2023 went to the U.S., making it the largest single-country export destination. Trading data by Japan’s Ministry of Finance showed that cars accounted for around 30%, or 6 trillion yen, of total exports from Japan to the U.S. in 2024.
Americans’ appetite for Japanese crossovers and SUVs is huge. Cars like the Toyota Corolla and RAV4 have been some of the best-selling models in the U.S. for decades. However, the RAV4 is manufactured in Canada, and even though the Corolla is made in the U.S., 25% of its part content comes from Japan, according to the American Automobile Labeling Act.
Reliable and affordable Japanese vehicles have been the go-to choice for millions of American families. Now, they are set to cost substantially more.
90%: Toyota To Cover Tariff Costs For Suppliers
Photo by: Toyota
The bigger players in the U.S. auto industry might absorb the impact of tariffs better than the others. We’re already seeing that happening, as Toyota’s North American division has informed its suppliers that it will pay for the extra costs of parts imported from Mexico and Canada, according to Nikkei.
The finer details of how it will assist its suppliers are being worked out. However, it’s unclear how long Toyota will continue to absorb the costs of tariffs. As we’ve reported before, even the most American-made cars, like the Tesla Model Y, have only about 70% of their parts content originating within the U.S. The rest of it is imported, mainly from Mexico or Canada.
Uncertainty has been the biggest disrupter in the auto industry over the past few months. Even though the tariffs have been finalized, it’s unclear if Trump will offer any trade relief to America’s allies in the coming days. As he said on Thursday, he’s open to tariff cuts only if nations offer the U.S. something “phenomenal” in return.
100%: How Are The Tariffs Affecting Your Wallet?
Automakers sold a record number of cars, including EVs and hybrids, in the first quarter. Buyers rushed to showrooms, especially in March, to grab a deal before prices increase due to tariffs. Were you also part of the March madness? Or do you plan to wait and watch until things become more stable? Leave your thoughts in the comments.
Have a tip? Contact the author: Suvrat.kothari@insideevs.com
