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Looking back on the last year, the U.S. saw a dramatic shift in federal electric vehicle policy in favor of fossil fuels. Among the most significant, the One Big Beautiful Bill Act ended several federal EV and clean vehicle tax credits, and federal agencies moved to weaken clean car standards and California's Clean Air Act waiver authority. Funding for the National Electric Vehicle Infrastructure (NEVI) program was paused and then revived. Despite federal headwinds, states continued to advance EV adoption through robust incentives, charging infrastructure buildouts, and fleet commitments. The market response has been swift and substantial, with leading automakers recording multi-billion-dollar write-downs and shifts in their EV production plans. Overall, near-term U.S. EV deployment faces policy-driven turbulence, but underlying consumer interest, technology progress, and state actions suggest that the clean transportation transition is getting a re-set in 2026, rather than a reversal.
Federal
- In a major blow to the affordability of EVs, the One Big Beautiful Bill Act sunset several EV and clean vehicle tax credits. The $7,500 EV tax credit commonly known as the "New Clean Vehicle Tax Credit", or 30D credit, officially expired on September 30, 2025. The "Previously-Owned Clean Vehicle" credit under Internal Revenue Code (IRC) 25E and the "Qualified Commercial Clean Vehicle" credit under IRC 45W also effectively expired, and will not be available for any vehicle acquired after September 30, 2025. EV sales spiked to a record share just before the credit ended, then plunged in October, suggesting regulatorily‑driven demand swings as buyers and sellers adjusted to new federal policy signals.
- The National Electric Vehicle Infrastructure (NEVI) program had a tumultuous road in 2025, after the Trump Administration froze unspent program funds. Following the overturn of such funding freeze by a federal district court in June 2025, the Federal Highway Administration released new interim guidance in August 2025 to restore funding to states. Notably, among other updates to provide flexibility to states, because the NEVI program was funded through FY 2026, the updated guidance allows states to release all remaining NEVI funds in a single solicitation.
State
- States have forged ahead with their EV policies despite federal uncertainty. According to a comprehensive EDF report released in early January 2026, every state has adopted multiple EV‑supportive policies. California leads with the most policies, while states like Arizona, Colorado, Illinois, and Alabama have built more diversified EV policy portfolios. Nearly every state offers incentives or rebates for EV charging equipment, and 40 states offer incentives for medium- and heavy-duty EVs. Charging investments have been near‑universal, with all states participating in NEVI. In sum, the report suggests that shifting federal policy in favor of fossil fuels provides even greater incentive for states to lead the charge on clean transportation initiatives that are already underway.
Industry
- Several major automakers announced billion‑dollar write-downs and realignment of their EV production capacity following shifting federal EV policy and consumer demand. General Motors, the largest U.S. automaker, reported a $7.1 billion loss in the last quarter of 2025 primarily due to the diminished value of its investments in battery and EV manufacturing facilities. These losses come after the company wrote down $1.6 billion in EV assets and announced plans to scale back EV production in favor of producing more large, internal combustion engine vehicles. Ford Motors also reportedly took a $19.5 billion write-down to cut its EV losses and plans to pivot production towards more hybrid vehicles and lower-cost EVs. Foreign automakers were hit hardest by the Trump Administration's tariffs. Volkswagen, for example, saw its U.S. sales of EVs fall 20% in the last quarter of 2025, while EV sales continue to grow in Europe and China. To remain competitive, some automakers have considered dropping prices going into 2026, which industry analysts posit could lead to an uptick in EV sales.
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