The American EV Retreat Is Really a Three-Way Split

When Honda posted its first annual net loss since 1957 — a $15.7 billion write-down — CEO Toshihiro Mibe did something unusual. He did not blame market cycles or consumer sentiment. He named the specific government actions he held responsible.

EV demand had fallen sharply, making it "very difficult" to sustain profitability. — Toshihiro Mibe

Mibe's list is precise: the removal of federal EV tax credits, the easing of fossil fuel regulations, and new US tariffs. He then canceled three US electric models and this week Honda confirmed it will end US sales of the Prologue EV entirely after the 2026 model year, pivoting instead to 15 new hybrid models by March 2030 ^[1][2]. The synchronization point is not hard to find. The $7,500 federal tax credit expired on September 30, 2025. In the first quarter of 2026, US electric vehicle sales plunged 28%, with market share falling to 6.5% from 9.6% the year before ^[3]. Tesla, which had attributed roughly 30% of its US sales to the credit, projected a 12.5% sequential delivery decline ^[4].

This is going to be our first good read … of what the underlying demand looks like post the sunsetting of those U.S. EV tax credits. — Gene Munster

Ford took a $19.5 billion write-down in December 2025, three months after the credit expired, and canceled the F-150 Lightning along with its next-generation electric truck ^[5]. The timing is not subtle. What happened next was a three-way split. The dividing line is a cold calculation about what each company can afford to build and sell in a market where the policy floor has dropped out. The first camp is retooling for a cheaper second wave. Ford, despite canceling the Lightning, has not abandoned electrification. A 350-person skunkworks in Long Beach is developing a Universal EV Platform targeting a $30,000 midsize electric pickup for early 2027, and the company simultaneously launched Ford Energy to sell battery storage to data centers ^[6][7]. Kia, facing a nearly 60% drop in EV6 sales after the credit expired, cut 2026 EV6 prices by up to $5,900 to start under $40,000: essentially eating the lost $7,500 credit itself to hold the price point ^[8].

it has repositioned 2026 EV6 prices to help keep EVs affordable for those wanting to make the jump. — Kia

The second camp is retreating to combustion. General Motors invested $1.4 billion in North American plants to build V8 engines for trucks and SUVs, citing declining EV demand and Trump administration pressure to increase domestic investment ^[9].

St. Catharines will play a key role in one of our core vehicle programs for years to come, and it reflects General Motors’ confidence in the St. Catharines team and their proud 74-year legacy of powering our most popular vehicles. — Jack Uppal

Nissan canceled its $500 million EV production plan for Canton, Mississippi and will instead build gasoline trucks and body-on-frame SUVs at the plant ^[10]. These are not hedges. They are exits. The third camp is taking the middle ground: hybrids and extended-range electric vehicles. Ford is replacing the electric F-150 with an EREV version that carries a gasoline engine to recharge the battery. Ram launched the 1500 REV with a claimed 700-mile range using the same architecture. Scout Motors reported that 85% of its reservations favor the EREV over the battery-only version ^[11]. Honda's pivot to 15 new hybrids by 2030, while maintaining EV sales only in Japan and China, completes the picture. These automakers are abandoning the pure battery-electric vehicle as the only path to electrification. What forces the triage is a financial mechanism that gets less attention than the tax credit but may matter more in the long run: the off-lease residual collapse. Three-year-old EVs retained only 40% of their original value by the end of 2025, down from 90% in early 2022. The industry faces an estimated $8 billion in losses as off-lease volume peaks at 800,000 units in 2028, with each car averaging $10,000 below projected residual value ^[12]. When the lease ends and the car is worth half what the financing model assumed, the leasing economics that funded the first EV wave break. Every automaker now pricing a new EV must factor in a residual value that makes the math punishing. Each of the three camps is solving that problem differently. Here is where the story turns. The same automakers retreating from EVs in the United States are investing in them everywhere else. In Australia, EV market share hit a record 23.3% in June 2026, the fifth consecutive monthly record, with BYD selling 18,881 vehicles and Tesla's Model Y becoming the best-selling individual vehicle ^[13]. In Europe, battery-electric registrations jumped over 50% in March 2026, driven by oil price spikes from the Iran crisis ^[14]. Tesla reclaimed the top global EV spot in the first quarter with 358,023 deliveries, with French registrations up 203% and Australian sales up 40.7% ^[15][16]. The geographic split is stark. GM invests $1.4 billion in V8 plants at home while Stellantis plans to produce an affordable electric car in Italy by 2028 with China's Leapmotor ^[17]. Honda cancels US EVs while maintaining EV sales in Japan and China. Volkswagen's CEO calls China a "fitness centre" for developing battery tech and smart cockpits for export to Asia, South America, and the Middle East ^[18].

The know-how we gained (in China) is compelling us towards our goal of becoming a leading tech player in the automotive industry worldwide. — Oliver Blume

The variable is policy. The United States is the only major market that simultaneously killed its purchase incentive, banned its cheapest competitors through 100% tariffs on Chinese EVs, and rolled back emissions rules. The tariffs alone keep sub-$30,000 models from BYD and Zeekr out of the market while the average new car price approaches $50,000 ^[19].

as long as I have air in my body, there will not be Chinese vehicles sold in the United States of America. — Bernie Moreno

Ford CEO Jim Farley crystallized the absurdity of this policy trap in a single week in April. On April 14, he urged the US government to block Chinese EV imports, calling it an unfair fight. Days later, he admitted Ford's own EVs "were designed the wrong way" and announced the company would benchmark against those same Chinese rivals ^[20][21].

There's no way this is a fair fight. — Jim Farley

We should not let them into our country. — Jim Farley

Keep them out, copy them, and admit they are leading the world: all in the same breath. It is the logical endpoint of a policy environment that protects the domestic industry from competition while dismantling the incentives that made its products viable. The American EV retreat is real, but it is a retreat from a policy environment, not from electrification. The same automakers are investing in EVs everywhere the economics still work. The question now is whether the United States will let them build one that anyone can afford to buy.