The recent imposition of tariffs on imported vehicles and auto parts by the United States government has raised concerns about the potential impact on electric vehicle (EV) adoption in the country. Many electric vehicles, particularly lower-cost models, are imported into the U.S., and the 25% tariffs imposed by President Donald Trump are expected to increase their cost and likely lead to higher prices for consumers.
Impact on Automakers and Consumers
Increased costs due to tariffs could reduce demand for new vehicles, hurt automotive profit margins, limit cash flow, and leave less room for funding research and development. This could make U.S. automakers less competitive in the global marketplace, especially in China. “If they are having to spend more money to either pay for tariffs or move production to the U.S., that’s significant capex for most of the companies,” said Sam Abuelsamid, vice president of market research at Telemetry. “That’s funding not going to R&D, which means they’re not going to be able to innovate and bring new technologies to market.”
Affordability is already a major concern for potential EV buyers, with the average transaction price of a new EV exceeding $55,000, according to Cox Automotive Inc. Additional challenges include range anxiety, charging infrastructure concerns, and electrical grid instability. Trump’s administration has also reconsidered incentives for EVs, including a potential elimination of the up-to-$7,500 subsidy on plug-in vehicles.
Automaker Responses
General Motors Co. (GM), the second-largest EV seller in the U.S. behind Tesla Inc., saw its EV sales nearly double year-over-year in the first quarter of 2025. However, GM imports some of its EV models, such as the Chevrolet Equinox EV, from Mexico. “We’re building on our engineering efforts to match the ideal battery to each vehicle — optimizing performance, cost, and range to meet the unique needs of our customers,” said Kurt Kelty, GM’s vice president of battery, propulsion, and sustainability.
Ford Motor Co.’s Mustang Mach-E is also produced in Mexico, and the company imports the hybrid Lincoln Nautilus from China. Stellantis NV, which builds all its EVs outside the U.S., has started idling some production plants due to the tariffs.
Potential Consequences and Opportunities
While the tariffs may pose challenges, there could be some benefits for U.S.-based EV production. The Inflation Reduction Act, signed by former President Joe Biden in 2022, provides manufacturing subsidies for EV batteries, encouraging investment in U.S. battery production. Companies like GM, Ford, and Stellantis have announced plans to increase battery production in the U.S.
The outcome of the tariffs on EV adoption remains uncertain. Some consumers, like Gesika Kline, who leased a Ford Mustang Mach-E, are concerned about the potential impact of tariffs on prices and incentives. Others, like Inder Dosanjh, CEO of California Automotive Retailing Group, remain optimistic, noting that dealers will adapt to the changing market.
As the situation unfolds, one thing is clear: the electric vehicle landscape in the U.S. is poised for significant changes in the coming years, driven by a complex interplay of tariffs, consumer demand, and industrial policy.
