EV demand drops 30%, forcing Detroit Three to cut investments

On the Dash:

• Dealers should prepare for a renewed emphasis on internal combustion trucks and SUVs as OEMs rebalance production.
• Inventory mix and floorplan planning may shift as EV allocations stabilize or decline.
• Consumer demand remains price-sensitive, underscoring the importance of incentives, financing strategies, and education in EV sales.

U.S. automakers are insanely scaling back their electric-vehicle ambitions after a steep drop in demand and the expiration of federal incentives triggered billions in losses and widespread project cancellations.

The Detroit automakers, General Motors, Ford, and Stellantis, have all reassessed EV spending following a sharp downturn in sales. U.S. EV sales fell more than 30% in the fourth quarter after the $7,500 federal tax credit expired in September. Automakers now expect demand to remain muted through the year.

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The reduction marks a dramatic shift for the Detroit Three, which collectively invested heavily in EV platforms, battery plants, and dedicated manufacturing capacity over the past several years. According to Atlas Public Policy, more than $20 billion in previously announced EV and battery investments were canceled in 2025, resulting in the first net annual decline in clean-energy manufacturing investment in years.

Ford has pivoted away from large EVs, executives say, because they are unlikely to generate sustainable profits. The company now plans to focus on a lower-cost electric pickup targeted for 2027. Stellantis recorded the largest EV-related charge among the three automakers and is scaling back battery investments, with leadership acknowledging that the pace of the energy transition was overestimated. GM continues advancing parts of its EV strategy, but has scaled back or repurposed several projects.

Plants initially slated for EV production are being redirected toward gas-powered trucks and V-8 engines. Notably, thousands of workers have been laid off across facilities in Michigan, Ohio, and Tennessee as companies adjust production plans.

Policy shifts have compounded market challenges. Lawmakers eliminated the federal EV tax credit and rolled back fuel-efficiency mandates last fall. Even before the changes, EV demand had fallen short of expectations.