01:38 07-01-2026

How US auto policy pivoted from Biden to Trump: EV credits, tariffs, and the rise of hybrids

From 2021 to 2024, the federal agenda under Joe Biden centered on speeding the shift to electric vehicles and tightening fuel economy and emissions rules. Regulators and the White House aligned transport decarbonization with industrial policy: boosting battery and EV production in North America, expanding charging networks, and pushing fleet efficiency. The point was to nudge the market—making EVs mainstream not only through demand, but by reshaping the rules.

From 2025 under Donald Trump, the course shifted noticeably. The focus moved to cutting regulatory burden, stepping away from “mandatory electrification” rhetoric, and doubling down on protectionism. In practice that means revisiting environmental rules, hardening trade policy, and prioritizing lowering car prices here and now—even if that slows the industry’s structural reset.

Taxes and incentives: the key pivot around the EV credit

The Biden-era financial engine for EV adoption came via the IRA: a federal credit of up to $7,500 for new electric vehicles (with conditions on assembly and component origin) and support for manufacturing supply chains.

In Trump’s second term, EV incentives were pared back. The market felt it as the sudden loss of a price “cushion”: federal perks buyers had factored into total cost of ownership stopped being a guaranteed demand driver. Short term, that typically pulls purchases forward ahead of deadlines, then cools sales in the following months—especially in the mass market, where price sensitivity is highest.

Trade policy and localization: tariffs as a tool to pull assembly home

Under Biden, localization leaned on the carrot—credits, grants, and access to subsidies. From 2025, the stick grew: imported vehicles and components faced tougher tariffs, while exemptions and preferences hinged on North American content and supply chain structure.

For automakers, that’s a double load. Tariffs prod companies to move assembly and sourcing to the U.S./North America, accelerating decisions on localization and local suppliers. But in the near term (one to two years), costs rise because global supply chains have inertia: you can’t quickly swap out electronics, materials, assemblies, and subcomponents long sourced in Asia or Europe. The more complex the vehicle and the larger the imported electronics share, the higher the risk of cost inflation.

Production priorities: EVs versus hybrids and ICE

From 2021 to 2024, carmakers aggressively poured money into cleaner transport as regulation, subsidies, and post–fuel price spike consumer sentiment all lined up. In 2025–2026, plans turned more pragmatic: manufacturers increasingly talk portfolio strategy, with hybrids and plug-in hybrids serving as a bridge between ICE and full EVs. You can see it in product plans and capex allocation: more money stays with ICE platforms and hybrid drivetrains, less with breakneck expansion of pure-electric lineups at any cost.

Ford in December 2025 officially announced a “review” of its Model e strategy. The company canceled several EVs, including the electric F-150 Lightning pickup (a flagship e-truck built since 2022) and the “T3” electric pickup for its Tennessee plant. It also shut down an electric commercial van and a three-row electric crossover. In place of the Lightning, Ford plans a pickup with extended range—effectively a hybrid with a larger battery module and a gasoline generator. The company said it is pivoting sharply to hybrids and ICE: near term, Ford will expand its gasoline and hybrid lineup and only by 2027 launch a new affordable EV (developed by a California skunkworks team) at around $30 00. Ford will take $19.5 billion in charges (including $8.5 billion in losses from canceled EVs and $6 billion from ending its SK On battery partnership). Ford projects that by 2030, hybrids, PHEVs, and EVs together will make up about 50% of its global sales (versus 17% in 2025)—a clear bet on a steadier glide path rather than a sudden leap.

General Motors also recalibrated investment. In October 2025, GM recognized a one-time $1.6 billion loss tied to revising electrification plans for its plants. The company slowed the launch of new EVs (for example, it delayed the Chevrolet Silverado EV pickup and Equinox EV SUV) while putting $4 billion into refreshing and releasing new hybrid and gasoline models. GM hasn’t abandoned EVs (in 2025 it brought a cheaper new-generation Chevy Bolt to market); its strategy now is balance: EVs (Bolt, Cadillac Lyriq, and others) roll out in parallel with renewed ICE spending. According to Reuters, GM even decided to temporarily increase output of some popular gasoline models instead of planned EVs at its plants. Management says it is adapting to a “shrinking pool of EV buyers” in the U.S. and warns of possible further costs from plan revisions.

Stellantis (Jeep, Ram, Chrysler, and others) took a similar route. The company canceled the Ram 1500 (Ram REV) electric pickup for the U.S. market and said it would focus instead on hybrids and reviving powerful gasoline trims. In September 2025, Jeep said it would not produce the Gladiator 4xe hybrid pickup—plans were revised, citing changing customer preferences. Likewise, Ram is ending production of the already presented 1500 REV, officially due to insufficient demand for electric trucks in North America. Overall, Stellantis is redirecting major funds: $13 billion to expand its ICE lineup in the coming years (new gasoline engines, extending the life of older models, and more). At the same time, Stellantis openly says it will continue electrification in Europe and China (driven by those regions’ rules) but proceed more conservatively in the U.S.

Crucially, this isn’t “the end of EVs,” but a change in tempo and logic. EV programs increasingly shift to targeted launches—where margins, brand strength, or local regulations support them—while mass “electrification by plan” gives way to a more flexible approach. It’s more a cooling of overheated expectations than a U-turn.

Market and consumer: what’s happening to demand

In this stretch, American buyers vote with their wallets. When EV ownership costs are supported by incentives and gasoline is pricey, electric models build share quickly. When subsidies shrink and questions remain about charging infrastructure and residual values, buyers tend to choose a compromise: a hybrid or an efficient ICE crossover.

An added factor in 2025–2026 is the cost of credit. High rates raise the price threshold and make any add-ons—tariffs or the loss of subsidies—hit harder. In that climate, the market gravitates to familiar vehicles with predictable liquidity: pickups, SUVs, and hybrids. No surprise there.

Winners and vulnerable: how the impact is distributed

Companies that bet early on hybrids and kept EV ambitions more measured are in a more comfortable spot: hybrids deliver fuel savings without changing habits, and their supply chains are more mature. Meanwhile, brands heavily tied to imports—both finished vehicles and components—feel tariff pressure more acutely and face a choice between higher sticker prices and thinner margins.

The premium segment is partly cushioned by buyers’ higher purchasing power, yet it’s still exposed to tariffs because many premium models are traditionally imported. Those already running U.S. plants and able to reallocate production quickly are better positioned.

Unions and the social dimension

Under Biden, union priorities in autos rallied around a “just transition”: if the industry changes, new jobs (in batteries, EV platforms, and electronics) should match traditional roles in pay and protections. Under Trump’s second term, a slower EV shift gives some “classic” operations breathing space, while raising the risk of targeted cuts where supply chains were built for rapid EV growth but ran into weaker demand and/or revised investment plans.

What matters for 2026: the likely scenario

By early 2026, the industry is running at two speeds. In the U.S., policy and demand support hybrids and a longer life for ICE models. At the same time, the global market—especially China and parts of Europe—keeps pushing electrification, compelling American and global automakers to maintain EV and battery capabilities even if the U.S. tempo is temporarily lower.

The takeaway is straightforward: the Biden era tried to accelerate a technological pivot through standards and subsidies. Trump’s second term is an attempt to retune the system for affordability, deregulation, and hard-edged localization via trade tools. For automakers, that’s not about choosing one technology, but about constantly rebalancing the portfolio: hybrids as the mass-market compromise, ICE as the profit backbone for the near term, and EVs as the wager on the next cycle of competitiveness.