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How the US got left behind in the global electric car race
Getty ImagesYou could be forgiven for thinking that electric cars might finally be gaining momentum in the US.
After all, sales of battery cars topped 1.2 million last year, more than five times the number just four years earlier. Hybrid sales have jumped by a factor of three.
Battery-powered cars accounted for 10% of overall sales in August – a new high, according to S&P Global Mobility.
And in updates to investors this week, General Motors, Ford, Tesla and other companies all reported record electric sales over the past three months.
This marked a bright spot in an industry wrestling with the fallout from still high interest rates and buyers on edge over inflation, tariffs and the wider economy.
But analysts say the boom was caused by a dash to buy before the end of a government subsidy that helped knock as much as $7,500 (£5,588) off the price of certain battery electric, plug-in hybrid or fuel cell vehicles.
With that tax credit gone as of the end of September, carmakers are expecting momentum to shift into reverse.
“It’s going to be a vibrant industry, but it’s going to be smaller, way smaller than we thought,” Ford chief executive Jim Farley said at an event on Tuesday.
“I expect that EV demand is going to drop off pretty precipitously,” the chief financial officer of General Motors, Paul Jacobson, said at a conference last month, adding it would take time to see how quickly buyers would come back.
Even with the recent gains, the US, the world’s second biggest car market, stood out as a laggard in electric car sales compared to much of the rest of the world.
In the UK, for example, sales of battery electric and hybrid cars made up nearly 30% of new sales last year, according to the International Energy Agency (IEA). Latest industry figures suggest that number is even higher.
In Europe, they accounted for roughly one in five sales, while in China, the world’s biggest car market, sales of such cars accounted for almost half of overall sales last year, according to the IEA, and they are expected to become the majority this year.
Take-up in some other countries, like Norway and Nepal, is even greater.
Electric vehicles (EVs) tend to account for a smaller share of sales in Latin America, Africa and other parts of Asia – but growth there has been surging.
Policy differences
Analysts say adoption in the US has been slowed by comparatively weak government support for the sector, which has limited the kinds of subsidies, trade-in programmes and rules that have helped the industry in places such as China, the UK and Europe.
Former President Joe Biden pushed hard to increase take-up, aiming for electric cars to account for half of all sales in the US by 2030.
His administration tightened rules on emissions, boosted demand through purchases for government fleets, nudged carmakers to invest with loans and grants for EV investments, spent billions building charging stations and expanded the $7,500 tax credit as a sweetener for buyers.
Supporters cast those efforts in part as a competitive imperative, warning that without these US carmakers would risk losing out to competitors from China and other countries.
But President Donald Trump, who recently called climate change a “con job”, has pushed to scrap many of those measures, including the $7,500 credit, arguing that they were pushing people to buy cars they would not otherwise want.
“We’re saying … you’re not going to be forced to make all of those cars,” he said this summer, while signing a bill aimed at striking down rules from California, which would have phased out sales of petrol-only cars in the state by 2035. “You can make them, but it’ll be by the market, judged by the market.”
Bloomberg via Getty ImagesElectric cars have become more affordable in the US in recent years – but they still cost more than comparable petrol-powered vehicles.
And Chinese carmakers like BYD, which have made rapid inroads in other markets thanks to low prices, have been effectively shut out of the US, due to high tariffs targeting cars made in China, backed by both Biden and Trump.
As of August, the average transaction price of an electric car in the US was more than $57,000, according to auto industry research firm Kelley Blue Book, about 16% higher than the average for all cars.
The least expensive battery car on offer, a Nissan Leaf, costs about $30,000 (£22,000). By comparison, several models can be found for under £20,000 in the UK.
Analysts say what buyers do next hinges on how carmakers set prices in the months ahead, as they contend not only with the end of the tax credit but also tariffs on foreign cars and certain car parts that Trump introduced this spring.
Hyundai said this week it would offset the loss of the tax credit by lowering the price for its range of Ioniq EVs. But Tesla said the cost for monthly lease payments of some of its cars would rise.
Stephanie Brinley, associate director of S&P Global Mobility, said she did not expect to see many firms follow Hyundai’s example, given the pressures from tariffs.
While some buyers may opt for EVs anyway, “next year is going to be hard,” she warned, noting that her firm is calling for overall car sales to fall by roughly 2% in 2026.
“It would have been difficult enough if all you had to deal with is new tariffs, but with new tariffs and the incentive going away, there’s two impacts.”
Carmakers had already been scaling back their investments in electric cars.
Researchers say Trump’s policy changes could reduce those investments even more.
“It’s a big hit to the EV industry – there’s no tiptoeing around it,” said Katherine Yusko, research analyst at the American Security Project
“The subsidies were initially a way to level the playing field and now that they’re gone the US has a lot of ground to make up.”
However Ms Brinley said she was hesitant to declare the US behind in an industry still testing out technology alternatives.
“Is [electric] really the right thing?” she said. “Saying that we’re behind assumes that this is the only and best solution and I think it’s a little early to say that.”
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Hormuz flashpoint: Why Indian-flagged ships are in focus as Middle East tensions hit global shipping – The Times of India
As tensions rise in Middle East and vessel safety in the Strait of Hormuz comes under renewed focus, the flag a ship flies has emerged as a key factor in maritime security, regulation and state protection.Flagging a vessel means it is registered with a country and must comply with that nation’s maritime laws and regulations. It also gives the flag state powers to investigate and penalise violations of domestic and international laws. Since regulations differ across countries, shipowners often choose jurisdictions that best suit operational and commercial needs, according to an ET report.An Indian-flagged vessel is a commercial ship registered with the Directorate General of Shipping and authorised to fly the national flag. Such vessels are governed by the Merchant Shipping Act and operate under Indian jurisdiction as a sovereign extension on the high seas.These ships are taxed by Indian authorities and must comply with Indian maritime safety, labour and environmental rules. To qualify for Indian flagging, vessels must come to domestic waters for registration and the owning company must be incorporated in India.Indian-flagged ships also receive strategic backing. India protects their interests through naval and diplomatic intervention when required. Experts say this creates a higher compliance burden than “Flag of Convenience” jurisdictions such as Panama and St Kitts.According to Rajeev Kumar Yadav, as quoted ET, director at Vertex Marine Services, Flag of Convenience systems allow vessels to be flagged from anywhere in the world within “3-4 days”.Indian-flagged ships calling at domestic ports can also benefit from lower port levies and tax liabilities, along with priority in government cargo movement and public sector charter contracts.During the Iran crisis, more than two dozen Indian ships were stranded west of the Strait of Hormuz after strict high-risk area classifications were imposed. The Indian Navy escorted several tankers to safety, though some vessels remain in the Persian Gulf.No direct attacks have been reported on Indian-flagged vessels so far, largely due to India’s balanced diplomatic approach in the crisis.However, being Indian-flagged does not give the government powers to decide freight rates or commercial destinations. The state’s role is limited to enforcing civil, criminal and regulatory laws onboard, along with international safety, environmental and labour compliance norms.India’s flagged fleet has been expanding. The Indian-flagged vessel fleet reached 14.2 million Gross Tonnage (GT) in March, with 92 vessels of 1.5 million GT joining during FY26.The long-term Maritime Amrit Kaal Vision 2047 aims to sharply raise India’s share of the global flagged fleet and increase utilisation of Indian-flagged ships from about 7 per cent currently to 30-40 per cent by 2047.
Brent crude sinks by a tenth after Iran says the key waterway is open for commercial ships for the rest of the ceasefire.
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Oil prices tumbled on Friday after Iranian officials said they would allow commercial traffic to resume in the Strait of Hormuz. This lifted equity markets in Europe and New York, where major indices hit new records.
Citing the ceasefire between Israel and Lebanon, Iran’s Foreign Minister Abbas Araghchi said Tehran would lift its blockade on shipping through the key Gulf energy trade route.
“In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” Araghchi said.
Traffic in the strategic waterway, through which one-fifth of the world’s crude oil normally flows, has been disrupted by Iran since the US-Israeli offensive began on Feb. 28. At one point, this sent oil prices to a peak of nearly $120 a barrel and roiled the global economy.
Both Brent, the benchmark international contract, and its US equivalent WTI fell below $90 per barrel following Tehran’s announcement. Brent later cut its losses and finished at $90.38 a barrel, down 9.1%.
‘Immediate impact’
“This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB.
The move also sent a jolt through equity markets, extending a rally in New York. There, equities have pushed ever higher since late March in anticipation of a breakthrough in the Middle East crisis.
“We had seen a big move the last two weeks, and now it’s just really pricing completely out the worst-case scenario, said Angelo Kourkafas, from Edward Jones.
Kourkafas also pointed to underlying strength in the US economy that should get more attention in the coming period as geopolitical concerns ebb.
“Geopolitical developments are moving in the right direction, and at the same time, the earning strength is hard to ignore,” Kourkafas said.
The broad-based S&P 500 finished at 7,126.06, up 1.2% for the day and 4.5% for the week.
‘Good news’
Earlier, European stocks closed higher, with both Frankfurt and Paris gaining 2%.
US President Donald Trump cheered the reopening of the Strait of Hormuz in an interview with AFP.
“We’re very close to having a deal,” Trump said in a brief telephone call with AFP from Las Vegas. He added there were “no sticking points at all” left with Tehran.
But Iran quickly pushed back on one key point.
Iran’s foreign ministry said Friday that its stockpile of enriched uranium would not be transferred “anywhere.” It rejected an earlier claim by Trump that the Islamic Republic had agreed to hand it over.
Shipping industry figures, meanwhile, gave a cautious welcome to Iran’s announcement.
A spokesman for German transportation giant Hapag-Lloyd, which has ships stuck in the Gulf, told AFP by phone that the reopening was “in general… good news.”
But he cautioned that shippers still needed details of what route vessels could take and in what order, citing fears of mines.
“One thousand ships cannot just go now to the entrance of the strait, that will be chaos. They (the Iranians) need to give clear orders,” said the spokesman, Nils Haupt.
“We would be ready to go very soon if some of these open questions can be solved within the weekend.”
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Hormuz flashpoint: Why Indian-flagged ships are in focus as Middle East tensions hit global shipping – The Times of India
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