It’s a match made in hell for most automakers. Federal incentives for electric vehicles are drying up after years of planning for a U.S. shift toward battery power, and the Trump administration’s new tariffs are hammering every industry—especially the automotive sector.
But as the U.S. economy is at the “find out” part of the equation a little bit sooner than everyone thought, some carmakers see a de facto end to fuel economy and emissions rules as a boon to their gas-powered car business. Yet is that really a smart move in the longer term?
Welcome back to Critical Materials, the best place on the internet to get a round-up of the most interesting EV, technology and industry news of the day. Today, we’re learning that regulatory rollbacks have made a way for the big three to make gas guzzlers again, while Honda feels the full weight of how EV investments and tariffs. On the other hand, used car sales giant Carvana says that it’s had its best sales yet of plug-in hybrid and EV models. Let’s hop to it, folks.
30%: ‘Back To Gas’ For The Big Three?
Photo by: Ram
The Trump administration apparently sees the pivot toward electric vehicles and electrification as un-American, so it’s doing everything in its power to absolutely destroy any and all investments in EV tech.
Even Elon Musk has seemingly been bamboozled; his cozying up to Trump’s cabinet and Trump himself didn’t save the regulatory credits that have been a huge source of revenue for Tesla, or even the EV tax credit. These regulatory credits, in particular, are responsible for billions of dollars in revenue for the brand, as other companies bought credits from Tesla, which allowed them to produce gas-burning vehicles and circumvent penalties for not meeting emissions goals.
Well, Trump is ending that program. Of course, that ain’t great for Tesla, but most pertinently here—that lets these big automakers pivot back to making big gas engines with little consequence. Right?
Well, it’s not quite all it seems. A recent article from the Wall Street Journal reports that although the Detroit manufacturers are in fact giving ICE a new lease on life, to one degree or another, things are a little more complicated than on its face.
Fact of the matter is, big ICE vehicles are profitable for these brands, whereas EVs largely aren’t yet.
But, although ICE big truck demand is still consistent at this point in time, to act as if this can go on indefinitely is not realistic. Americans are still in want of cheaper, more fuel-efficient cars, and most of these automakers are continuing their EV plans on a modified timeline. From the WSJ:
“Americans do like buying giant vehicles,” said Adam Lee, chairman of Maine-based Lee Auto Malls. “They’re going to see how many more giant SUVs they can pump out, because they sell a lot of them and make a lot of money on them.”
Lee said he worries a truck-heavy strategy could fail in the long run. He said he hopes Detroit carmakers, in particular, stick with their promises to continue improving EVs.
“Otherwise, we’re going to find out we’re the only country in the world not embracing fuel-efficient vehicles and EVs,” he said.
Matt Bowers, owner of a dozen dealerships in New Orleans and surrounding areas, said the internal combustion engine is simply in demand today. People who crave fuel efficiency are drawn to smaller SUVs rather than EVs, he said. Regulatory changes, he said, allow companies to “just build what people want, which is probably a pretty good idea.”
Remember, General Motors is still investing big in battery plants and battery tech, and Ford has a new EV debut on Monday it’s calling a “Model T moment.” And Stellantis… well, never mind.
Although the title talks about how the big three are currently backpedaling toward making big ICE trucks and SUVs again, none of the information in the article tracks with what we already know; people are broke, and they want cars that are cheap to buy and run. Arguably, EVs can be the best solution to that problem, but we can’t seem to get the idea of an affordable EV off the ground here in this country, for several reasons, some of the biggest of them being political.
We know the world is continuing to electrify, so putting that off for relatively short-term gains in ICE truck production is a bad move. Can Americans truly afford to keep financing nearly six-figure trucks to the gills until the end of time? Probably not.
60%: Honda’s Profits Halved Because of EV “Misfires” (And Tariffs)
Photo by: InsideEVs
Once again, we’re just now coming to terms with just how bad the U.S. tariffs on every imported thing into the U.S. are hammering away at the profits of car brands. Ford revealed it lost $800 million for Q2, its first such loss in two years, directly caused by tariffs. Similarly, GM is reporting a tariff impact of $1.1 billion.
Now, it’s Honda’s turn on the merry-go-round. It revealed that its overall profits are down 50% compared to to last year. Part of it has to do with tariffs, but a big portion of the drop in profit is due to something Automotive News calls “EV misfires”.
Essentially, the brand was spending too much both on R&D for its new 0 Series models, and incentives for the GM-based models on lots right now.
American Honda currently sells two EVs in the U.S., the Honda Prologue and Acura ZDX crossovers. Honda sold 16,317 Prologues through June, while Acura sold 10,335 of its ZDX. But to move the metal, American Honda splurged on incentives.
It spent an average of more than $12,000 per Prologue and some $21,000 per ZDX during the April-June quarter, according to industry marketing promotion data from Motor Intelligence.
That’s a lot of money. Coupled with what Honda feels is overinvestment in its homegrown EV program. Together, Honda says these EV woes were responsible for $780 million worth of issues, hurting the brand’s profits.
Thankfully, Honda says this won’t affect the launch of the Ohio-made Honda 0 Series and Acura RSX EVs that it already has planned.
90%: Carvana’s Used EV and PHEV Sales Explode
Despite everything kind of melting down in the new EV world, it’s actually never been a better time to buy a used EV. Sure, bad depreciation may not make for good news for new car companies or buyers who bought new EVs, but if you’re in the market for a used one, there are quite a few deals to be had.
And, it seems like consumers are noticing this. Carvana, one of the biggest direct-to-consumer used car stores, has seen its EV and PHEV sales rise significantly. Back in 2023, EV and PHEV models only made up about 2% of overall sales. Now, it’s jumped to 9% as of last quarter.
From Business Wire:
“We’re always working to grow selection to offer an inventory that meets our customers’ preferences, and as electrified vehicle options expand, this segment continues to increase as a percentage of Carvana’s sales. Last quarter, nearly 1 in 10 vehicles we sold was an EV or PHEV – a significant shift from just a couple of years ago,” said Christina Keiser, Executive Vice President of Strategy at Carvana. “The widening selection of electrified SUVs has been especially powerful, offering buyers greater variety in one of the most sought-after body styles.”
The report is actually very illuminating. SUVs and crossovers take top billing, but sedan models are still high too. The Tesla Model 3 and Model Y are the leaders in the used EV space, but the Jeep Wrangler 4xe is the most popular PHEV.
100%: How Hard Would It Be To Port Over Chinese Stuff?
After seeing how poorly EV investment is going with Honda and Ford (and GM, to some extent), I can’t help but ask: Is it time to synergize more with China?
I’m not talking about importing Chinese brands themselves, but rather for the established manufacturers in the West to lean more into their Chinese joint venture partners, and specifically for America. Honda, GM and Ford have separate EV projects that are supposedly developed by the brand (with input or development work from China), but won’t come to America. For example, Honda’s Ye series is on the “W” platform meant for medium-sized EVs for China. What’s stopping them from being sold here?
Well, we know what’s stopping this. Anti-China rules on battery sourcing, software and privacy concerns, and national security issues. But what if an automaker just… figured it out? Could that be the move here, and would buyers be into it?
Contact the author: Kevin.Williams@insideevs.com
