In today’s Finshots, we tell you what’s happening with EV mandates and subsidies in the US and why President Trump hates them.

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Now, on to today’s story.

The Story

In 2021, former US President Joe Biden made a bold move. He signed an order to nudge carmakers to churn out more electric vehicles (EVs). After all, he had an ambitious goal up his sleeve that by 2030, half of all cars sold in the US should be “zero-emissions vehicles”. It was part of his administration’s plan to cut greenhouse gas emissions (GHGs) and fight climate change.

A couple years later, the US introduced the Inflation Reduction Act (IRA). It was a sweeping law to cut GHGs and save Americans around $1,000 a year on energy bills. It even gave people financial perks like rebates and tax incentives for buying EVs, like a $7,500 tax credit. Pretty cool, right?

But just recently, the new President Donald Trump sort of rolled back all of these rules. This means that his administration might go ahead and pass laws that could undo the eco-friendly policies designed to push US manufacturers and consumers towards cleaner, less polluting technologies.

So, what’s going on?

Well, you might think that this is just politics. The new administration might want to do things its way. But here’s another side to the story. Scrapping EV mandates and incentives might just be what automakers wanted all along.

Why’s that, you ask?

Because making and selling EVs isn’t easy yet.

Take charging infrastructure for instance. The US has over 3 million EVs today but just over 64,000 public charging stations, and many of them don’t even work properly. On average, they’re 20% less reliable than regular fuel stations. Add to that long charging times, fewer locations and the fear of running out of power, and it’s no surprise that people are hesitant about buying EVs.

Charging an EV isn’t cheap either. Costs vary wildly depending on the charging station, type of charger and an EV’s battery. You could spend as much as filling up on fuel but still drive fewer miles with an EV.

So, people naturally might want to go back to their fuel-powered cars.

Sure, there’s no doubt that EV sales are growing. In 2024, the US sold 1.3 million of them, which is a 7% increase from 2023. But they still make up just 8% of the market, which is a measly 0.3% over the previous year. This small growth doesn’t make things easier for carmakers, who are required to sell more EVs every year because of the 2030 mandate requiring half of all US car sales to be EVs, even if buyers aren’t ready or willing to adopt them at that pace. What’s worse is that it could lower their motivation to make EVs better or more affordable since fewer choices force consumers to buy what’s available.

And here’s where things get even trickier. The cost of this transition to EVs by 2030 is hefty. When you dig deeper, the supposed cost savings don’t quite add up.

One rule in the IRA says that by 2027, 80% of EV battery minerals must come from the US or countries with free-trade agreements (FTCs). This makes EVs eligible for tax credits, helping buyers save money.

Sounds straightforward, right?

Not quite.

See, EV batteries rely on critical minerals like cobalt, nickel and lithium. But most of these minerals come from outside the US and its FTCs. Sure, Canada and Australia, both FTCs, are rich in these resources. But they don’t trade exclusively with the US, so naturally they won’t supply all of their minerals to the country. That would mean that the US will still depend on countries like Congo for cobalt and Argentina for lithium. And since these countries aren’t FTCs, that drives up costs.

To make things murkier, the IRA has a loophole. It says minerals qualify for tax credits if they’re processed in the US or an FTC approved country, even if the raw materials come from non-FTC countries. This workaround keeps the US dependent on non-FTC countries that may have weaker mining standards, raising both costs and environmental risks.

The end result is that EVs remain pricier for consumers, the car market gets distorted and the climate benefits of EVs don’t pan out as promised.

And that might simply explain why the Trump administration thinks that it’s time to ditch the unrealistic EV mandates and subsidies.

Instead, the idea is to give automakers breathing room to innovate and create the best tech without forcing EVs on consumers.

And guess what? This could actually help companies like Ford and General Motors since they’ve poured billions of dollars into EV production but aren’t generating profits yet. By slowing EV adoption, they could boost sales of their more profitable fuel-powered cars. And with a balanced mix of petrol cars for long trips, EVs for city commutes and hybrids for everything in between, they might even outsmart the growing wave of Chinese car imports.

But hey, doesn’t rolling back these rules clash with climate change goals?

It sure does.

The US could find it harder to meet its long-term emission reduction targets.

US cars and trucks alone account for over half of the greenhouse gases from transportation, which is one of the biggest contributors to the country’s overall emissions.

The solution?

Maybe ditch the subsidies temporarily and let the car market evolve naturally. But at the same time, improve charging infrastructure and cut the cost of EV minerals.

But President Trump wouldn’t agree.

In his book, climate change is just a myth.

In fact, Trump’s order has also frozen billions set aside for expanding EV charging infrastructure, like the $5 billion from the National Electric Vehicle Infrastructure Formula Program. This will slow down the growth of a proper charging network.

His administration appears more focused on boosting the US economy by going back to fuel-powered vehicles because the US has a domestic edge in fuel vehicle tech and manufacturing. This would give the US auto industry a fighting chance against China, which dominates the EV space, including its supply chains. China has also secured its spot as the second-largest holder of global lithium reserves.

Oh, and let’s not forget, the US is also stepping away from the Paris Agreement — a global pact to reduce emissions and curb global warming.

So yeah, it looks like the US will criticise EV subsidies, keep polluting and do nothing about it. And we’ll all be waiting and watching from the sidelines. 

Until then…

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