A year ago, the future of the U.S. electric vehicle industry was on the upswing. While the pace of EV sales had slowed, U.S. automakers were building battery factories and looking to design less expensive models.
Two bills passed during the Biden administration, the Inflation Reduction Act and the Bipartisan Infrastructure Law, provided tax incentives not only to automakers but also for battery production and other aspects of the EV supply chain. Regulations aimed at reducing vehicle tailpipe emissions also incentivized the industry to shift toward electric vehicles (EVs).
Now, an argument published in Foreign Policy Magazine, “America’s Electric Vehicle Surrender,” is all but sounding the death knell of the U.S. EV industry.
Narayan Subramanian, who served as director for energy transition at the National Security Council in the Biden White House and is currently an adjunct assistant professor at the Columbia Climate School, was a co-author of that piece.
LISTEN to the interview
This interview has been edited.
Julie Grant: What difference was President Biden’s push toward EVs making?
Narayan Subramanian: So you saw a couple of things. One, the increase in EV sales rapidly increased just between 2022 and 2024, after the Inflation Reduction Act and the Bipartisan Infrastructure Law were passed. You also saw a slow — and an emphasis on slow — a slow increase in the amount of EV infrastructure all across the country, so that’s charging stations. Then you saw a record number of announcements from automakers entering joint ventures and partnerships to manufacture all these different components and parts that go into the electric vehicle itself.
There’s generally a widespread consensus that the U.S. helped innovate a lot of these battery technologies, only to then see them go overseas.
So what you were also starting to see is this technology transfer where a lot of the next generation or current generation batteries, the manufacturing know-how, was coming back to the United States. There’s generally a widespread consensus that the U.S. helped innovate a lot of these battery technologies, only to then see them go overseas.
And so what the Bipartisan Infrastructure Law and Inflation Reduction Act incentives were doing was not only helping with the deployment and the adoption of electric vehicles, but also starting to reshore the manufacturing supply chains for those electric vehicles.
Julie Grant: China is charging ahead in electric vehicles, as you talk about in your article. Can you give us an overview of what’s been happening there and how quickly they’re moving [toward EVs]?
Subramanian: This has been a decades-long bet by China to basically ramp up and start controlling the electric vehicle market. So just to give you an example, China, about 20 years ago or even more, started establishing clear requirements that if you were a U.S. automaker, or any foreign automaker, that wanted to sell into the Chinese market, you had to do that through establishing a joint venture with a local Chinese firm. So that was step one for China to start building the manufacturing know-how on how to literally build an automobile.
Then China started providing incentives for the supply chain for electric vehicles, so batteries, the sub-components to batteries, and then slowly starting to go out and source and take control of large parts of the critical minerals value chains as well.
One example that we talk about in our article is this example of A123, a battery company that was innovating the next-generation lithium iron phosphate battery. So they had gotten a Department of Energy grant during the Recovery Act period.
China started providing incentives for the supply chain for electric vehicles…and take control of large parts of the critical minerals value chains.
And then, through completely legal means, after that company filed for bankruptcy, because they weren’t able to scale up and compete commercially, a Chinese firm was able to acquire that company and then essentially take that lithium iron phosphate battery technology overseas, scale it up. And now the next generation of electric vehicles in China are actually using these LFP batteries. They’re easier to charge. They’re able to even go longer distances, and they take less critical minerals.
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Grant: You’ve written that if President Trump’s bill passes, the so-called Big Beautiful Bill, with its mix of tax cuts and cuts to programs like Medicaid and the clean energy incentives in the Senate, then the entire EV supply chain could be ceded to China. Why?
Subramanian: The only thing that was anchoring the electric vehicle supply chain, the batteries, the sub-components like cathodes and anodes and critical minerals — the only thing anchoring the demand for those things to be produced here in the United States was that electric vehicle tax credit that had the sourcing requirements in the Inflation Reduction Act.
Absent that, there’s really nothing stopping an automaker like a Ford or GM or Tesla from purchasing from foreign sources for batteries and critical minerals.
The only thing that was anchoring the electric vehicle supply chain…to be produced here in the United States was that electric vehicle tax credit.
Now, one can say tariffs might be able to provide some incentives for U.S. automakers to avoid buying from foreign sources. But in order for a tariff regime to really have that impact, it would have to be stable and very, very clear in its purpose.
And right now, [in what] we call it the tariffication strategy, we’re not seeing clarity in terms of timeline or purpose that provides enough certainty for an automaker to really develop a supply chain in the U.S. or in friendly countries to respond to that.
So we’re basically left in this chaos where U.S. automakers are probably going to want to opt for the cheaper foreign alternatives, which are going to be largely Chinese-owned, in order to meet their material requirements to produce electric vehicles.
The picture looks bleaker when you look out into the 2030s, when the…Chinese counterparts are going to have gone fully into the electric vehicle space, leaving the U.S. automakers quite behind.
And it’ll have ripple effects, not just on the electric vehicle makers, but also on the battery makers and the critical minerals producers. And so, overall, that entire supply chain could be ceded to China over the next couple of years if these incentives and regulatory requirements are taken out.
Grant: You mentioned in the article, “the battery belt,” in the South and the Midwest. So what was happening with battery production, and what’s happening now that there’s uncertainty around this industry?
Subramanian: Just in the last couple of months, there have been a record number of announcements to delay or cancel a number of projects in the EV and battery supply chain where you will see the impact of this most acutely is in the Southeast in South Carolina, North Carolina. Georgia, Kentucky, because these states were the location of a number of these new critical minerals processing and battery supply chain projects. So the economic impacts are going to be quite substantial in those states.
Grant: If the [budget] bill passes, what would this do to the EV industry here long-term, and what have automakers been saying about this?
Subramanian: The uncertainty around the tariffs has already hit automakers quite hard. The macroeconomic headwinds that the country’s generally facing right now are also probably having a dampening effect on consumers going and buying new vehicles anyway. I would say that U.S. automakers are probably headed for pretty dire straits for the next couple of years if this bill is passed in its current form or even only just mildly modified.
What the U.S. had in terms of the luxury brand dominance via Tesla, perhaps will be lost as well.
The picture looks bleaker when you look out into the 2030s, when the U.S. automakers’ Chinese counterparts are going to have gone fully into the electric vehicle space, leaving the U.S. automakers quite behind both technologically and also perhaps even aesthetically.
The Chinese automakers are even building the luxury brands out quite a bit. And so what the U.S. had in terms of the luxury brand dominance via Tesla, perhaps will be lost as well.
Grant: Let’s talk about California. The Biden administration gave the state waivers to create tailpipe emission rules that were tougher than federal standards. Those rules said all new vehicles there would be zero-emission by 2035. In May, the U.S. Senate voted to revoke the waivers. What’s going on here, and why is California such an important player in this space?
Subramanian: California, being a major demand driver, does orient the long-term business strategy of a lot of these automakers, just inevitably because of the sheer size and weight of California as a state.
So this law is significant because the Clean Air Act actually allowed states to go above and beyond the federal floor that the Environmental Protection Agency and the Department of Transportation provided. So California essentially said by 2035, we’re going to be phasing out gas-powered vehicles.
What Congress did, what the Senate did under the Congressional Review Act (CRA), was essentially trying to take away that waiver authority that California had to go above and beyond the federal floor. It’s unclear whether the CRA even gave them that authority to take the waiver away from California. Nevertheless, it’s an opening salvo from the Trump administration and the Republican-controlled Senate that they’re going to be going after the “EV mandate.”
I would push back generally against the notion that it is a mandate because it’s purely based on tailpipe emissions, and it’s not a federal mandate either, and there’s significant demand and supply-side incentives to help support that 2035 target, so to speak, that California has.
Grant: President Trump is pushing to increase the supply of critical minerals, which is dominated by China. Critical minerals are used by the defense industry and also to make electric vehicles. Why do you argue that Trump’s approach might not be worthwhile?
Subramanian: One of the fundamental problems with that approach is, as we say in the piece, minerals don’t move without markets. And what we mean by that is ultimately something has to provide an incentive or a disincentive for someone to not buy critical minerals from China, but instead buy it from a U.S. producer or an allied producer, a friendly producer of critical minerals.
It’s really hard to compete in the global auto market, innovate next-generation batteries and secure critical mineral supply chains unless you view all three of those imperatives as intertwined.
Every supplier is trying to find the cheapest cost material to sell their product at the cheapest cost so that they can get the most consumers, right, the most buyers. And so the minute you take out the demand-side incentive or any kind of regulatory incentives to buy from a U.S. producer or friendly producer, most of these producers of batteries are going to go and source from Chinese or other low-cost producers. There’s nothing stopping them from doing that.
That’s where this whole strategy kind of falls apart, in my opinion, because the biggest demand driver for critical minerals right now, outside of the defense context, is coming from electric vehicles. That’s a hard fact that the administration has to grapple with.
All of these incentives and the regulatory signals are intertwined is really, really important. It’s really hard to compete in the global auto market, innovate next-generation batteries, and secure critical mineral supply chains unless you view all three of those imperatives as intertwined.
Narayan Subramanian is an adjunct assistant professor at the Columbia Climate School and a co-author of the article “America’s Electric Vehicle Surrender,” in Foreign Policy Magazine.
