Pod Insights Decoder The EV tax credit is dead. What now? About this episode This is Jake Kastrenakes, executive editor at The Verge. I’m filling in for Nilay here while he settles back into full-time hosting duties. We’ve got a very good episode for you today. My guest is Verge transportation editor Andy Hawkins, and we’re talking about the federal EV tax credit.
The tax credit expired at the end of September, and there are a lot of questions about what happens to the auto industry after its demise. This is a really hard, complicated set of problems, with a lot of moving parts, so I was really excited to have Andy on the show to break down all of these components and give us a clearer picture about what’s coming next.
Links:
The EV tax credit is dead — here’s what happens next | The Verge
GM takes a $1.6 billion hit on EVs | The Verge
Ford CEO Jim Farley on China, tariffs, and affordable EV | The Verge
Ford lost $5 billion on EVs in 2024, teases new models | The Verge
EV makers fill tax-credit void with costly discounts | Automotive News
So much for Ford and GM’s scheme to extend the EV tax credit | The Verge
Stellantis replaces EV tax credit with its own discount | Automotive News
Tesla sales picking up thanks to expiring tax credit | The Verge
California Reverses Pledge To Revive EV Tax Credit | SF Chronicle
Global EV sales growth slows to 15% in August, research firm says | Reuters
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Transcript 7,409 words · 10 speakers
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1:25 Speaker 03 Hello and welcome to Decoder. This is Jay Kastanakis, executive editor at The Verge. I'm filling in for Neelai for one last Thursday episode before he returns to full-time hosting duties. We've got a very good episode for you today. My guest is Verge Transportation Editor Andy Hawkins, and we're talking about the federal EV tax credit. The tax credit expired at the end of September, and there are a lot of questions about what happens to the auto industry after its demise. In its latest form, the tax credit offered a $7,500 discount on eligible domestic-made electric cars. As you'll hear Andy explain, this was designed to accomplish a lot of different things all at once. Prop up the United States EV market, fight climate change, and keep pace with China,
2:10 Speaker 03 which has become a global leader in affordable EVs. But the second Trump administration has not been kind to the renewable energy movement, and EVs have become a bit of a political football over the last several years. Trump has turned them into a symbol for government overreach and wielded them as a weapon to target his enemies. Just a few weeks ago, at the United Nations General Assembly, Trump called climate change a "con job." So yeah, that's how he feels about that. Now, the EV tax credit has expired, and it is not coming back anytime soon. So where does that leave the auto industry? And what happens to the traditional American carmakers that have been investing heavily in domestic production to electrify their lineups? As you'll hear Andy lay out, there's a tough road ahead.
2:55 Speaker 03 EVs are expensive to make and expensive to buy. The supply chain they rely on is intertwined with China and now subject to tariffs and an escalating trade war. And consumers are highly price-sensitive in the EV market, much more so than the early adopters who flocked to Tesla years ago. If the US auto industry wants to win back buyers, it's going to need to produce cheaper EVs, much like China does. And that's going to require manufacturing, supply chain, and technology innovations that will take some time to materialize. This is a really hard, complicated set of problems with a lot of moving parts. So I was excited to have Andy on the show to break down all of these components and give us a clearer picture about what's coming next.
3:40 Speaker 03 Okay, Verge Transportation Editor Andy Hawkins on the federal EV tax credit. Here we go.
4:00 Speaker 03 Andy Hawkins, welcome back to Decoder.
4:02 Speaker 04 Hello. Thank you for having me.
4:03 Speaker 03 All right, so Andy, August 2025 was the best selling month for EVs in US history. There was a big rush to buy these up. A month later, the EV tax credit expired. This feels like a big moment for the industry, a little bit like maybe the rug was sort of pulled out from under them. So I want to spend some time talking about what this EV tax credit was and what it means for EVs going forward. So can you tell me a little bit about what did this tax credit do and why is it disappearing now?
4:35 Speaker 04 These are all great questions. So I think to start out with the EV tax credit, it was a $7,500 tax credit that you could take, anyone could take for buying an electric vehicle. This was for new electric vehicles. Obviously, the vehicles had to meet certain qualifications. They needed to be manufactured in North America. Their batteries needed to be sourced from our trade partners. There's a long list of requirements, but essentially what it was, how it boiled down to was the Biden administration, through the Inflation Reduction Act that they passed in 2022, established this EV tax credit as a way to incentivize consumers, US consumers, to buy more electric vehicles. There's an acknowledgement that climate change was a problem, that over a quarter of carbon
5:16 Speaker 04 emissions are a result of personal transportation, essentially tailpipe pollution from gas burning, gas guzzling vehicles. The idea was we need to shift the American public from gas guzzlers to electric vehicles, and the best way to do that is to give them a discount. Because EVs are expensive, right? The batteries are very expensive to produce, and they are typically sold at a premium over gas vehicles. And so the idea was we need to reduce that price at the point of sale in order to incentivize American car shoppers to buy more electric vehicles so that we can tackle climate change. This is not a new idea. There have been various discounts and incentives in place since far back to even like the W. Bush era. And then they also were established during Obama.
6:01 Speaker 04 They existed during the first. Trump administration and then Biden sort of reevaluated them and they how they existed into their current form until just recently when through Trump and the congressional Republicans big beautiful budget bill that they passed on July 4th eliminated the tax credit. So as of September 30th, it is gone. So you're you're correct. EV sales were fantastic last quarter. I think we saw more EVs sold in the United States than had ever been sold before. They reached over 10% of all vehicles purchased through the third quarter of this year. And now, as of September 30th, it's been a hard stop. There is no more EV tax credit. And now we're living in a post-credit world.
6:44 Speaker 03 So you said that climate change was a big motivator in pushing these tax credits. But I'm curious how much standing up the EV industry was a part of this too. Would the EV industry be where it is today without these credits?
7:00 Speaker 04 Definitely not. The tax credits were absolutely essential to the EV market as it existed today. The automakers relied a lot on these credits in order to obviously get consumers through the doors into their dealerships and to to consider making this shift. Because I think as we've seen over the number of years, the auto industry has been able to target EVs towards these early adopters very effectively. But there's a limited number of these early adopters, people who are interested in sort of, you know, being future forward, buying futuristic cars, switching to a different fuel source. And they have basically, all those people have bought their EVs, right? So this was going after a larger, more crucial segment of the car shopping market, and that is people
7:44 Speaker 04 who are more motivated by costs than they are by technology. So the credits were essential in getting those people into dealerships into considering EVs. And now that they're gone, I think that there's a widespread understanding that EV sales are going to drop dramatically. And we're seeing the industry now shift away from from EV production. You know, a lot of these automakers are winding down certain plans that they had to spin up battery factories and new models. They're they're pulling back. They're taking big write downs and cash hits. You know, GM just today, as we're talking right now, announced a $1.6 billion write down on their EV production because they're essentially needing to readjust their production plans for a post-credit environment.
8:29 Speaker 04 I would say that the credit was essential into sort of propping up EV sales for a long time. And now that they're gone, we're gonna, we're gonna see what's gonna happen, I guess.
8:39 Speaker 03 Yeah. So this is one of the things I'm really curious about. You know, the Trump administration, they talk a big game about American manufacturing. And like you were just saying, a lot of American automakers have been making big investments in EV manufacturing. So why did they decide to kill this credit now?
8:56 Speaker 04 It's a great question. In a lot of ways, it's cutting off your nose to spite your face type situation, you know, for an administration that claims to be very pro manufacturing. This is the most anti-manufacturing thing that you possibly could do. Obviously, the Trump administration has, you know, been conducting a scorched earth campaign over climate change, kneecapping support for renewable energy for a vast majority of things, and EVs sort of fall into that bucket. But, you know, throughout the campaign last year, you know, in the run up to the election, Trump was talking about the EV mandate, right? That that was one of his big attack lines on Biden was that, you know, Biden, through the IRA, was forcing people to buy electric vehicles. Obviously, that is false. There was no EV mandate. These are all just incentives.
9:40 Speaker 04 But I think through both eliminating the tax credit and then also rolling back fuel standards, fuel emission standards for gas vehicles, which was another way that Biden was trying to incentivize the industry to shift to electric was by making it tougher to, you know, make gas cars without penalties. I think the Trump administration is basically just throwing open the door to the oil and gas industry. Obviously, Trump, a huge supporter of oil and gas. Those industries have traditionally supported his campaigns. And now this is just a gigantic, you know, red ribbon wrapped package for oil and gas by eliminating these incentives and rolling back these standards. I think it sort of falls into the same category of the attacks that this administration has
10:23 Speaker 04 done on clean energy, renewable energy, and efforts to fight climate change. This is a real like, you know, just optimistic conversation we're having here. It's really just like a cheery, you know, like fun, fun talk we're having here.
10:39 Speaker 03 A delightful future for clean technology. It, it seems very promising. I, I'm curious, were there certain automakers who were benefiting more from this policy than others? I saw that Ford and GM were pretty intent on keeping this credit going and even found some sort of hacky workarounds to extend it for a little bit.
10:59 Speaker 04 Yeah, that was a real interesting twist that we saw over the last few weeks. But yeah, I would say GM especially was benefiting a lot from this tax credit through their brands like Cadillac and Chevy. They were really selling a lot of these EVs and shifting a lot of production to here in the United States. Ford, a little bit less so, they, they only had one EV that qualified for the tax credit. That was the Ford F-150 Lightning, the Mustang Mach-E, still a good, a big seller here in the U.S., but was manufactured in, in Mexico, so did not qualify for the tax credit. But that said, I think both of those companies were huge benefactors of the, of the tax credit. And now that they're gone, you're seeing them scramble and try to come up with some sort of new ways that they can try to like prop up their EV sales.
11:41 Speaker 04 So they, what they did was before the tax credit expired, they worked up this scheme so that they would essentially buy all of their EVs from their dealers that they had left in their inventory, put a down payment on those, and then lease those to consumers with the tax credit baked into that lease price. So that they could essentially get the tax credit before it expired and then pass that credit along to consumers through this leasing loophole that existed in the, in the current tax credit scheme. So it was, I think, a hail mary pass that they were attempting to do. It looked like it was going to work. They had consulted with the IRS and they basically said, is this legal for us to do this? And the IRS is like, yeah, I guess technically it is. And so they were going to go through with it until a couple of Republican senators.
12:25 Speaker 04 I think Bernie Moreno, who's from Ohio, used to be a, a car salesman before he became a senator, snitched on them essentially and was like, we're going to investigate this and drag them in for, for our committee. And this is not, you know, what the American people voted for, blah, blah, blah. They snitched them out, both GM and Ford, you know, quickly reversed course and said that they were not going to follow through with this plan. So it, it just goes to show that, you know, even through their creative methods, if, if someone catches wind and they get even like the hint of some sort of repercussion, that they will quickly back down from it.
12:56 Speaker 03 Buying your own cars just to sell them again with the credit that you got is, it's kind of brilliant. It's an absolute hack. I love it. I don't know if it's appropriate or not, but you know, that's the tax code at work.
13:08 Speaker 04 Yeah, it's a creative thought process that went into it.
13:14 Speaker 03 We need to take a quick break. We'll be right back.
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13:56 Speaker 02 This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.
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14:48 Speaker 03 We're back with Verge Transportation editor Andy Hawkins. Before the break, we were discussing the EV tax credit, what it did, why it died, and how some carmakers like Ford and GM failed in their efforts to keep those incentives going. Next, I want to zoom out a bit and talk about the market for EVs and what might happen now that those credits have been taken away.
15:12 Speaker 03 One thing you mentioned is that they were going to lease them back to consumers. And I saw that leases have been really popular for electric vehicles. Do you have a sense of why that is where people's interest has been for these types of cars?
15:25 Speaker 04 Yeah, so I mentioned it briefly, but there was a leasing loophole as part of the IRA tax credits before they expired. So essentially, in order to accept the tax credit on a purchased vehicle, there's a long list of qualifications. The vehicle needed to be made in North America, the battery minerals needed to come from trade partners, the battery components needed to come from our trade partners. There's just a long list of requirements. And so it made it kind of tough. There was only like 20 EVs that actually qualified for the tax credit, I think, at its height. That said, for leasing, none of these requirements existed, right? You could have a vehicle that was manufactured in Germany, or South America, or where have you. The battery could come from China. It didn't really matter because, for some reason, they left this loophole wide open.
16:10 Speaker 04 So that's why you saw leasing become very popular with EVs, especially for like luxury made EVs like German Mercedes-Benz, BMW. So all of these EVs could qualify for the tax credit through the leasing loophole. And that, I think, led to a sharp increase in the number of EVs that were leased as opposed to purchased outright.
16:31 Speaker 03 That's amazing. It seems like this was all thought through very, very.
16:36 Speaker 04 Yes. If by that you mean not at all.
16:40 Speaker 03 Ford and GM, they tried to beat the system. It ultimately failed. Do you think we're going to see more efforts by states to discount EVs? Or do you think that these companies are going to begin to just cut the prices?
16:55 Speaker 04 I do think that there were some states, like California, for example, that said that they were going to try to step in and put in place their own incentives for EV purchases. But I think that they quickly realized that that was just not financially possible. Gavin Newsom, the governor of California, recently reversed this pledge to offer state credits to help keep these more affordable, saying that, you know, his quote was, We can't make up for federal vandalism of these tax credits. You know, like California has a huge economy. They have a huge budget, but there's, there's no accounting for the federal elimination of these tax credits. It just wouldn't have made sense for them financially. I, I think what you're seeing now is a lot of automakers put in place some discounts, some leasing deals,
17:40 Speaker 04 other things in place to help with their, their current EV inventory, right? So EV sales were, were extremely robust during the third quarter. That's expecting now to, to drop dramatically after the credits are gone. So now all these dealers with the EVs that they still have in their inventory are going to be left going, what do we do with these? So the, the automakers are authorizing pretty steep discounts. So we've got Audi, we've got Kia with a $6,000 discount. We've got Hyundai with a $7,500 discount. We've got Lucid offering, you know, 0.99% for 72 months and $7,500 off. We've got Rivian with 1.99% for 60 months. So they're all doing a variety of their own, kind of like they're trying to gin up their own kind of like temporary discounts as a way to deal with the, the inventories that they currently have.
18:26 Speaker 04 But those are only expected to last for so long, right? Maybe through October, maybe until like November at the very, at the very most. And then after that, you're going to see a lot of these discounts evaporate. And EVs are just going to have to sort of compete on their own, right? They're more expensive than gas cars. We're going to see sales drop off and it's going to be pretty rough for a few quarters. Even Tesla, Elon Musk has said that, you know, Tesla investors should expect a rough few quarters over the next like year and a half or so. And I think that that's just going to be sort of the, the reality of the situation.
18:56 Speaker 03 I've read that automakers tend to lose money on electric vehicles. And so if they're trying to add new discounts, if this credit is going away, which is going to make these high prices even more unpalatable. What, what is there for them in the market? How are they going to be able to manage this? Do we think that EVs are going to become suddenly more cost effective to manufacture? Is this going to force them to just make these things happen on a much faster timeline? Is that even possible?
19:25 Speaker 04 Yeah, it's going to require like a huge kind of recalibration of the, you know, production process of the supply chain. Cause yeah, you're correct. EVs do cost more money to make than gas cars. I mean, we're talking about the battery being sort of the most expensive component in electric vehicles today. That is costing a lot. So most car companies do take a loss on their EV sales. I think Ford last year lost like $5 billion on EV sales. Like I just mentioned before, GM just took a $1.6 billion write down. So yeah, it's, it's, it's a huge money loser. And what they're going to have to do is now figure out a way to
20:06 Speaker 04 make EVs that are profitable. It's possible. Tesla does it, right? They haven't been able to do it over the last year because their sales have been down. But this past quarter, their sales have been up because of the EV credit expiring. And before that, they were profitable and they were making money off of their Model 3 and Model Y vehicles. And you can do that through production changes, through supply chain changes, and really just making a vehicle that is more affordable. I think that there was a mindset in the auto industry for a long time that car companies need, in order to get people to buy their EVs, they needed to be sort of the exact carbon copy of a gas car, right? And what are the
20:49 Speaker 04 gas cars that people like the most? They're big SUVs and trucks. So you saw a lot of companies like Ford and GM make electric versions of the same vehicles, right? Big gas guzzling, trucks and SUVs. The Ford, you know, Ford made its electric F-150 Lightning. GM is making, you know, an Escalade, an electric version of its Escalade. And they made electric versions of the Hummer, the Sierra EV truck. So the idea was that like, in order to get people to make this switch, we need to sort of lure them in by making things as familiar and comfortable as possible. I think that that has proven to be an ineffective way in order to sell EVs. They're too heavy. They're too big. The batteries required are too much. And now
21:29 Speaker 04 you're seeing the industry shift and pull back, especially from EV trucks in particular. For example, Stellantis recently announced that it is not going to be making a full electric version of its Ram 1500 Ram Charger and is going to be focused on making extended range EVs, which are essentially kind of like souped up hybrids. So I think that there's going to need to be a huge retrenchment in the industry in order to make an EV that is both affordable, that some people will want to buy, and that is also profitable for the company. And that's going to require a lot of effort on the part of these companies.
22:05 Speaker 03 You mentioned Tesla's struggles and Tesla's really interesting example here because they actually faced the end of an electric vehicle tax credit before, correct? This is in 2019 and I think they they hit some sort of cap. What happened back then?
22:21 Speaker 04 So yeah, back then, the iteration of the tax credits that existed were they were similar to the ones that we just had, but there was this cap that if you sold 200,000 of a certain model of vehicle, that after that 200,000 vehicle that was sold, then the tax credits would be phased out for that vehicle. So Tesla was the first, obviously, as a full EV maker, only making electric vehicles. They were the first to hit that cap. GM followed soon afterwards. But then, with the Biden tax credits, they got rid of the idea of a cap altogether and they put sort of a lot of other restrictions in place. So Tesla was able to get the tax credit back. Even with that tax credit for the past year, their sales have been dropping compared to year
23:01 Speaker 04 over year. And that is due mostly to the Elon of it all, as we like to say at the verge, with him going hard into Trump and obviously emerging as a extremely controversial political figure, took a huge dent into Tesla's sales. That's also due to rising competition to both domestically and also in China, which is a huge market for Tesla. But you know, I think that the Elon of it all also had a huge, a huge effect on Tesla's sales. The company, over the last quarter, saw their sales increase as a result of these expiring tax credits. But yeah, I think that there was a situation in place which they with Tesla, even with the tax credit in place, was having a lot of problems selling their EVs.
23:43 Speaker 03 We need to take another quick break. We'll be right back.
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24:55 Speaker 02 This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest, or rush the field the fastest. Winner gets an Ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser-Busch InBev Michelob Ultra Beer, St. Louis, Missouri.
25:28 Speaker 03 We're back with Verge Transportation Editor Andy Hawkins. Before the break, we were talking about the current state of the EV market, and why the US auto industry is going to need to seriously rethink its strategy around manufacturing, marketing, and price if they're going to increase EV sales in the future. To pull that off, a lot of pieces need to fall into place, and some of it depends on some pretty unpredictable factors.
25:51 Speaker 03 So now that the tax credit has expired, are we expecting to see a major slowdown in EV sales? We hit this peak in August, but it sounds like growth was already starting to slow. So now these are going to get presumably even more expensive. What are we seeing is going to come next?
26:09 Speaker 04 So I think in the immediate aftermath, there's just going to be fewer choices, right? The EVs that are for sale now, we're going to see sort of be the ones, I think, over the next few years, we're seeing some models are being discontinued. Nissan recently announced that it would not continue to sell the Aria. A lot of other models that were promised are not coming out. So there's going to be a significant pullback, and I think there's also a decline in sales. But at the same time, I think that there is like an understanding that, you know, despite that short-term pain, you know, this is basically like we tore off the Band-Aid, right? That automakers are now going to have to step up their game and deliver on truly affordable models with no excuses and no subsidies. And,
26:54 Speaker 04 you know, optimistically, I think that EVs may carry less baggage, political baggage, going forward, right? That you, that you, politicians won't be able to attack them as being sort of like a symbol of government overreach, or that there is like an EV mandate that never existed. So I think a lot of this, the murkiness goes away, the stigma goes away. If your opinion is like, oh, the government shouldn't be subsidizing, you know, this car over that car, well, that's gone now. It's just another car, and there are fewer reasons and rationales basically to say no. So I think that we'll, we'll see EVs sort of competing on their own merit. And I think what a lot of people who own EVs in the industry especially will say, they do very well. Like, people like electric vehicles, and people
27:36 Speaker 04 who have bought electric vehicles have said in surveys, they don't intend to go back to, to gas vehicles. They like their electric vehicles. They like the fact that, that they're cheaper to operate, they're cheaper to own, they require less maintenance than gas cars. So I think that because of these merits, the EVs have over gas cars, that they will continue to be competitive. And then I think that automakers will really need to step up their game and truly deliver affordable models, which we're seeing some of them say that they intend to do. It's just not going to be an immediate situation. I think it's going to take some time.
28:11 Speaker 03 And that's what feels very optimistic to me, this idea that, okay, we're gonna... Cut off this credit that they've been propping themselves up with and suddenly they're just going to be able to cut costs somehow. Ford is working on a new manufacturing method for EVs, but even that sounds like a gamble. Ford CEO Jim Farley was on Decoder recently. He said there's a lot of risk involved with its new manufacturing methods and this whole new EV platform idea. Do you think that automakers are going to try and transform how they make these cars in order to get to that more affordable place they need to get to? And what is the timeline on that? Because it does not feel like it's going to be a next year thing.
28:49 Speaker 04 Yeah, it definitely won't be. It's going to take a little while. You know, what Ford is talking about here is a wholesale reimagining of the production process, right? They're talking about cheaper, smaller batteries, less range, unicasting, which means making the parts of the vehicle as one huge part and not multiple parts that need to be welded together. Tesla has talked about like an unboxed manufacturing process that would allow them to reduce the cost of production significantly. None of these companies have been able to achieve any of these goals yet, and it will take a much longer process in order to make these changes. But that said, it's possible. It is possible. The reality is China has figured it out. They have cracked the code on cheap EVs.
29:34 Speaker 04 And one of the things that Ford cited in their announcement from the other month when they were talking about this new process, this new sort of like Model T era that is going to reinvent their EV production process, they cited specifically BYD, which is a huge Chinese company, and the ATO, which is one of their more affordable models, which has a battery that is around like 50 kilowatt hours, like extremely small battery when compared to like a lot of American-made EVs. This is a battery that potentially could help reduce the cost by $30,000 or more. So it is possible. There are models that exist. And I think when you see, when you hear folks like Jim Farley and others cite that, you
30:16 Speaker 04 know, these Chinese manufacturers, I think it shows how existential this problem is. They don't want America to become a backwater of gas-guzzling, polluting giant trucks and SUVs while the rest of the world shifts to high-tech, extremely efficient, electric-powered vehicles. And so I think that that is the reality of the situation. They're hoping to model some of these processes on what they see going on in China and elsewhere. And It's just going to be, I think, up in the air as to whether, you heard him himself. He's like, this is a huge risk. We may fail. We may fall flat on our face in trying to do this. I could lose my job. You know, any number of things could end up happening.
30:59 Speaker 04 But I feel like the worst of the federal actions are now over. You know, the credit is gone. There's not really anything else that Trump and the Republicans can do to, you know, further kneecap EV manufacturing. And so now like the real challenge begins.
31:16 Speaker 03 I don't try them. You know, I'm sure they could find a way. We should spend a moment talking more about the China of it all, because that does feel like it's a big element in all of this. China has these very impressive and I think much more affordable EVs. They can't actually sell them in the US. So to what extent was this credit meant to make the US competitive globally in the EV market? Or was that not even on our minds as we were, you know, trying to prop up this industry?
31:49 Speaker 04 No, no, it was hugely on the Biden administration's minds and the Democrats when they crafted these credits, right? So the idea was that the only way you could get one of these credits on an EV purchase is if the EV was made in the United States, the battery components were made here or from one of our trade partners. And that, you know, all the minerals, essentially, we're talking lithium, cobalt, nickel, magnesium, all of these things that go into a giant EV battery also needed to come from valid trade partner sources, right? So anywhere, you know, essentially not China. And because of that, you saw a lot of manufacturing and production, a huge amount shift to the
32:30 Speaker 04 United States, you know, like Ford, GM, Honda, Hyundai, all of these companies spinning up these giant factories, billion dollar factories with huge incentives behind them, and all these promises to create thousands of jobs in the communities, most of which were going to be in red states, right? In places like Kentucky, in Georgia, in Tennessee, places that traditionally voted Republican. That there was an idea that like if Biden could, you know, incentivize these companies to build in these communities that perhaps that could be a political win for him down the road. Boy, did that turn out to be wrong. It was a huge thing that the specter of China was looming over all of this.
33:11 Speaker 04 And now, you know, Trump and the Republicans, who ostensibly claimed to be also China hawks and extremely concerned about the rise of Chinese manufacturing, which is sort of spurring this whole tariff situation, have essentially eliminated all of these incentives and have handed China like a gigantic opportunity here to dominate the rest of the world with their electric vehicles. Now, right now, China is having a huge problem selling their EVs because they make so many of them and they're so cheap that there's now a glut. And the government is now telling the manufacturers, hey, slow down, you know, this is too much. The price war is getting crazy. They're slashing prices on these EVs. You know, this could potentially like ruin our economy. So there are problems in China too.
33:54 Speaker 04 But I think that they are sitting in a situation that is extremely advantageous when it comes to Europe. For example, they are moving aggressively on the EU. They're eyeing, you know, other markets like South America, India, Africa even. You know, like BYD, Neo, Geely, all these other companies are getting extremely aggressive in moving into these other markets because they have such a glut of vehicles and the US is just sort of sitting back and letting it all happen. So I think that there was a sense that they could challenge the Chinese dominance. All these battery minerals and elsewhere are coming from this country specifically. And now I think it's just, you know, we've lost the ability to really effectively challenge them.
34:35 Speaker 04 All we've got left is tariffs and I don't really think that that's going to slow them down as much as they think they will.
34:40 Speaker 03 Well, it's fascinating, you know, that not only is losing the tax credit going to raise the price of these vehicles, but to your point about the Biden administration's incentives for the supply chain, these companies put a bunch of work into establishing supply chains to comply with this tax credit. And now they don't have to do any of that. And so you've sort of been coming back to this refrain over and over again about how now these automakers are really and truly on their own with EVs and they just have to make it work. And so I guess that's a big question. What do they need to do in order to make it work?
35:18 Speaker 04 Yeah, I think that's a great, that's a great question. And I think that the companies are still figuring it out, right? Because they still, all of them say to a T, we are still committed to electrification. We are still committed to becoming EV companies primarily. But what you're seeing is the language around that has changed dramatically. You had Ford, GM, Volvo, Volkswagen and others and Mercedes, pretty much across the board. Every auto manufacturer four or five years ago came out and said, we are going to be an EV only company by X deadline, 2030, 2040, whatever. Pick your date. We are going to phase out completely gas cars. We are going to sell electric vehicles only.
36:02 Speaker 04 And there was, you know, it wasn't just out of the sense of like having to fight climate change, there was actual regulatory pressure on them to do so. California said that they were going to ban the sale of gas cars by 2035. The EU said that they were going to ban the sale of gas cars by 2030. And now you're seeing a huge 180 shift. The EU now is most likely going to eliminate that ban that they had put in place. California has lost its ability to set its own emission standards, thanks to the Trump administration. So now they are under the same program as the rest of the country and can no longer enforce a gas car sale ban.
36:43 Speaker 04 The Trump administration has also basically eliminated the need to monitor tailpipe emissions altogether. So it's been a huge 180. Regulatory pressure has essentially evaporated. And now it's going to be a question of like, are they actually going to follow through? Because they still say that they want to sell EVs. Are they actually going to follow through on that? Or is it going to be the same mix as we've seen, like 80% gas cars and maybe like 20% EVs and hybrids? And they're going to lose all this money in the process. So I think it's going to be like, we're going to see who are the real ones that are still committed to this project, to these vehicle programs? And who are the ones that were just saying it because there were, there was regulatory pressure on them to do so?
37:26 Speaker 03 It's a fascinating and worrying moment. You know, after a decade or more of pushing EVs for climate reasons, for technology reasons, for competitive reasons, all of that seems to be in backslide right now. And it's not entirely clear if these companies are going to be able to follow through and make this industry take off in the way that we hope they would.
37:49 Speaker 04 And like I said, I think like EVs are still better cars, right? And they will still sell. And I think that they have a lot of advantages going for them. It's just going to be a real tough time, I think, over the next, like, over the short term. I sort of buy the argument that EVs can compete on the merits because they are such better cars and they do offer like a much better value proposition for a lot of people. It's just going to have to be like, the companies have to actually like sell them at a, at a price that people actually want to buy them at. And that's going to be really interesting to see how that all unfolds. So yeah, it's going to be super interesting to watch. And as you know, The Verge is going to be on top of it.
38:24 Speaker 03 Hopefully they can get there soon. Andy, thank you for joining us on Decoder.
38:29 Speaker 04 Thanks for having me on.
38:33 Speaker 03 I'd like to thank Andy Hawkins for taking the time to speak with me. And thank you for tuning in. I hope you enjoyed it. If you want to let us know what you thought about the show or what else you'd like us to cover, drop us a line. You can email the team at [email protected] . We really do read every email. Decoder also has a TikTok and an Instagram account, and now a YouTube channel, too. Check those out at DecoderPod. They're a blast. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Also, consider subscribing to The Verge. If you're a paid subscriber, great news. You can now listen to Decoder, Virgin History, and The Vergecast completely ad-free. A lot of people have been asking for this, and we're excited to finally have it ready for you. Just head to your account preferences page to opt in to start listening without ads.
39:17 Speaker 03 And if you're not a member, you can sign up at theverge.com/subscribe to get ad-free podcasts plus other perks like exclusive newsletters and unlimited access to everything we publish. Decoder is a production of The Verge and part of the Vox Media Podcast Network. Our producers are Kate Cox and Nick Stat. Our editor is Ursa Wright. The Decoder music is by Breakmaster Cylinder. See you next time.
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