Global automakers are rapidly revising their electric vehicle strategies as pro-environment policies retreat in the U.S. and Europe while demand for internal combustion engine vehicles remains stronger than expected. More than a dozen major automakers are slowing EV investments or lowering targets, with the associated costs estimated at tens of billions of dollars.
At least 12 automakers are recalibrating the pace of their EV transition plans, the Financial Times reported on the 22nd (local time). The trend is spreading quickly across the industry, from mass-market brands to ultra-luxury marques.
Japan's Honda has withdrawn its previous plan to halt production of internal combustion engine vehicles by 2040. The company projected approximately $16 billion in losses over the next two years as it restructures its EV strategy. Mercedes-Benz, Ford, Stellantis, and Volvo are also adjusting their EV transition targets or pushing back timelines.
Similar movements are emerging among luxury brands. In the premium car market, where the shift to EVs has been relatively slower, more companies are adopting strategies that combine internal combustion engines with hybrids.
Rolls-Royce recently confirmed it will continue producing gasoline-powered vehicles beyond 2030. Bentley, Lotus, and Porsche have also scaled back plans for 100% or 80% EV lineups within the next decade. Many of these companies have decided to extend sales of plug-in hybrid (PHEV) models.
Lamborghini, synonymous with supercars, has also scrapped its plan to launch the fully electric Lanzador by 2030, opting instead for a plug-in hybrid model. Lamborghini CEO Stephan Winkelmann said, "There is a growing resistance to pure electric vehicles. There is an emotional element — the vibration of the car, the handling, the braking. One of the biggest objections to pure EVs is the loss of engine sound."
Analysts attribute the industry-wide strategy shift to a widening gap between changing policy environments and market demand. Since the inauguration of the second Trump administration, the U.S. has scaled back support by eliminating EV tax credits and reducing charging infrastructure investment. The European Union has also eased some emissions standards, softening the intensity of its green policies. With weakened policy support and consumer demand not shifting to EVs as quickly as anticipated, companies have begun reassessing their strategies.
However, these strategy changes are expected to increase cost burdens for companies. The FT estimated that the global auto industry has absorbed at least $75 billion in costs over the past year from EV strategy adjustments, including canceled model launches and reduced investment plans.