While electric vehicles (EVs) are loved by most, the EV revolution in the United States is facing an existential threat. Electronic vehicles promise a future of clean transportation, but at the moment the American EV market is at a crossroads as it is facing danger from both economic and geopolitical fronts. Due to the plummeting resale values of flagship vehicles and the escalating trade war with China, there are signs that the electric dream may be slipping away quickly.
Tesla faces a crisis of its own
Tesla is a forward-thinking company linked with innovation and is at the forefront of the EV market. The company’s most hyped vehicle, the Cybertruck, has turned into a cautionary tale. As per the CarGurus, the Cybertruck’s resale value has dropped by a staggering 53 percent within a single year. This is a rather alarming figure in an industry where depreciation is expected but is rather rare. The vehicle has faced backlash from dealers who choose not to stock it.
While Tesla’s market performance continues to drastically deteriorate, so too does citizen’s confidence in American-made EVs. Tesla shares has said to drop to half their value from just a few months ago. This collapse not only impacts investors but shakes consumer faith in the long-term reliability and desirability of electric vehicles made in the United States.
In all the turmoil stems the perception that EVs are luxury gadgets for tech enthusiasts which leads to the citizens embracing the view that they are expensive, depreciating rapidly, and too reliant on uncertain political and global trade conditions.
EVs future affected by trade turmoil
Although EVs have not fully disappeared in America, the EV industry is vulnerable due to international tension, especially when it comes to China. The recent wave of tariffs announced by former President Donald Trump is not just another chapter in the U.S. and China trade disputes. This time, the core foundation of how electric vehicles are built have been challenged.
What initially started as a war of tariffs between the U.S and China has been blown out of proportion. The U.S. initially imposed a 34 percent tariff on Chinese imports. These issued tariffs which are designed to protect American manufacturers come at a high cost. In retaliation, China initially matched but then raised the tariffs and took a more strategic step: tightening control over rare earth materials.
Rare earths are considered to be the unsung heroes of electric vehicle production and is a vital component of the magnets that power EV motors. China controls roughly 90 percent of the world’s supply. By limiting access to these rare-earth minerals, China has effectively caused a struggle to global EV supply chain. Without these rare earths, electric cars can’t be manufactured efficiently or economically.
China behind the bleak future of electric vehicles in America
Needless to say, the future of electric vehicles in America seems bleak as this single move could be catastrophic for American EV production. The increased tariffs and the tightened control of rare earths has escalated manufacturing costs, increases vehicle prices for consumers, and could stall the rollout of new models. The most unsettling fact for American EV manufacturers is that China’s EV manufacturers have a stronger hand, as they are less affected by their own export controls, and they may shift their focus to markets outside the U.S.
The global push affecting the future of EVs in America
At a recent forum, the former Chinese government minister encouraged domestic EV manufacturers to accelerate their global expansion plans amidst the growing international resistance. The message has become evident: China sees itself as the future of electric mobility, and China is willing to face down tariffs and the supply chain challenges to make it happen.
Considering the increasing costs and dwindling consumer confidence, the American EV sector could shrink dramatically.
