Energy Musings - December 15, 2025

The electric vehicle market in the U.S. and Europe are in turmoil as subsidies end and mandates against internal combustion engine vehicle sales cause auto manufacturers to lose money.

The Electric Vehicle World Is Looking Different

Everyone knew that when the One Big Beautiful Bill was signed into law, the U.S. electric vehicle (EV) market would experience significant spasms. Few predicted the turmoil the European EV market would encounter because Europe did not change its policies. Instead, much of the global EV market turmoil reflects the erosion of climate change alarmism.

When Congress began debating the OBBB in the spring, which eliminated EV subsidies, consumers considering buying an EV accelerated their decisions to take advantage of the $7,500 per-vehicle subsidy before it evaporated on September 30. As a result, September light-duty vehicle sales were robust, helped by a surge in EV sales, making the third quarter the best-ever for EV sales.

Record U.S. EV sales in 3Q2025.

EV sales in September, according to Cox Automotive, were 147,716, up 44.4% year-over-year, but down 0.8% month-to-month. Interestingly, used EV sales were also strong in September, climbing 75.8% year-over-year to 40,569 vehicles, and up 4.8% from the prior month. Both new and used EVs were entitled to subsidies.

October, however, was a different story. EV sales were 74,835, down 30.3% year-over-year, but down 48.5% from September’s sales. The used EV market remained strong, as 31,610 were sold, a year-over-year gain of 36.2%, but down 20.4% from September’s record sales.

Cox Automotive has not reported November vehicle sales figures, but according to Edmunds, another authoritative source on the automotive market, the slide in EV sales continued from October. Edmunds noted that total light-duty sales rose slightly from a 15.3 million seasonally adjusted annual rate (SAAR) in October to 15.6 million. But it is estimated that the EV market share fell to 5.1% from the record high of 11.3% in September.

Clean energy newsletters put a positive spin on the October EV sales data. An article published by Electrek, a newsletter that opines on EVs, carried the headline: October EV sales slid, but deals and rebates are still in play. Since the November numbers are not available (partly because not all auto manufacturers report monthly sales, which forces data monitoring services to contact the nation’s auto dealer network for information), we have not seen a comment from Electrek. The author of the referenced article stated that EVs are cheaper to operate than internal combustion engine (ICE) vehicles. Various studies, especially those conducted by Anderson Consulting, refute that claim. Discussions we have had with prior EV owners indicate that they ditched their cars due to their cost.

What we have, however, from Electrek are general observations and comments from specific auto manufacturers. Ford Motor Company does report monthly sales. It stated that it sold a total of 166,373 vehicles in the U.S. last month, 0.9% less than in November 2024. However, Ford’s EV sales plunged 60.8% in November, with only 4,247 units sold. At the same time, its hybrid vehicle sales climbed by 13.6% to 16,301 units.

Of Ford’s EV sales, the Mustang Mach-E accounted for the bulk with 3,014 vehicles, while its F-150 Lightning pickup truck sales were only 1,006. Compared with November 2024 sales, the Mach-E was down 49%, and the F-150 Lightning fell 72%. The remaining EV model’s sales, the E-Transit, dropped 82% to just 227 units.

Ford’s EV experiment has been a financial disaster. It went into the EV business with plans to create a new manufacturing platform and battery ventures, with the intention of becoming the leading U.S. EV company. For the third quarter, Ford’s EV business lost $1.4 billion, bringing the nine-month losses for 2025 to $3.6 billion. Ford attributed $3 billion of the loss to its existing EV models and $600 million to the development of new EVs. Total losses since the company began its EV operations totaled $15.6 billion (2022, $2.2b; 2023, $ 4.7b; 2024, $5.1b; 2025, $3.6b).

Other auto manufacturers, such as Kia and Honda, also suffered significant declines in their EV sales in November. Kia’s EV6 sold 603 cars compared to 1,887 in November 2024. Its EV9 model’s sales dropped to 918 from 2,115 a year ago. For Honda, its Prologue sold only 903 units, compared to 6,828 a year ago, while its Acura ZDX model saw its year-ago sales of 1,317 fall to 22.

We are now learning about EV models that will not survive the industry turmoil. The Wall Street Journal wrote about the potential of the F-150 Lightning being shut down. Honda’s Acura ZDX will end after one year on the market, while questions are being raised about its Prologue.

There continue to be questions about the financial viability of EV manufacturers. That could be a serious issue for vehicle owners when manufacturers fail, as updates to EV systems are no longer available, and eventually, all support ends. These orphaned EVs become giant paperweights.

Remember when BloombergNEF declared that the U.S. had joined Europe and China in surpassing the tipping point of 5% of new car sales being electric vehicles? That was in 2022. BloombergNEF said that if the U.S. followed the other 18 countries that had surpassed a 5% share, EVs would account for 25% or more of new U.S. car sales by 2025. Even with the pulling forward of sales into 3Q2025, the U.S. EV share didn’t even reach half of BloombergNEF’s projection.

U.S. EV sales never followed BloombergNEF’s predicted path.

How did they get this so wrong? Likely, by embracing a dynamic that was supported by government help, but which distorted the true market. Many EV skeptics pointed out that cars are not purchased the same way cell phones are, and that government subsidies distorted the economics of EVs. Furthermore, there is always a small segment of the population that desires to be “technology” first movers, but that is a very narrow slice of the automobile-buying population.

What we know about the automobile market is that hybrids have become the preferred vehicle. These vehicles release less pollution than traditional ICE vehicles. More importantly, they eliminate the range anxiety fears for buyers. They also eliminate charging challenges for those without access to home-charging services, as the cost of public charging makes operating EVs more expensive than ICE vehicles.

As the following chart shows, Toyota, which has been behind the hybrid vehicle movement and was reluctant to back EVs, is the clear winner in the hybrid market. Ford stands out as the only American auto manufacturer that is addressing the hybrid market.

Hybrids will dominate the clean automobile market.

EV owners are learning of a new cost they had never considered. That is the implementation of an EV road pricing scheme. Federal and state taxes on gasoline and diesel fuel finance road and highway maintenance. Even with higher license fees on EVs, states are finding that they are falling behind in funding for road maintenance. Now, some states are considering implementing a road use fee, a cents-per-mile driving tax.

The most shocking announcement about a road tax came from the British government. Beginning in April 2028, British EV drivers will pay a road charge of 3p (4¢) per mile, while plug-in hybrid drivers will pay 1.5p (2¢) per mile, with rates rising with inflation in the future. The U.K. Office of Budget Responsibility says that the new tax is about “half the fuel duty rate paid by drivers of petrol cars.” Based on 8,500 miles of driving, an EV owner can expect to pay about £255 ($240), or about half the cost per mile that an ICE car will pay in fuel tax.

The government is counting on this new per-mile vehicle tax to bring in £1.1 billion ($1.5 billion) during the 2028-29 financial year, rising to £1.9 billion ($2.5 billion) by 2030-31. Key to these projections is the assumption about how many people will buy EVs over the next five years. This uncertainty prompted the government agency to call the projected revenue estimates “uncertain.” Expect higher costs if the revenue uncertainty becomes reality.

Interestingly, the vehicle tax applies to U.K.-registered EVs, regardless of where they are driven, while all foreign-registered EVs driven in the U.K. are exempt from the tax. The U.K. is counting on a government mandate that all new cars be electric or hybrid beginning in 2030, when the ban on the sale of ICE cars comes into force, which will drive an increase in EVs on the road and help pay the tax. But some auto executives say the new EV tax could make them less appealing to buyers.

The U.K. budget office echoed that sentiment when it noted that the new tax was “likely to reduce demand for electric cars as it increases their lifetime cost”. It added that “To meet the mandate, manufacturers would therefore need to respond through lowering prices or reducing sales of non-EV vehicles.” Good luck with that strategy.

The government forecast calls for about 440,000 fewer electric car sales through 2030 than previously anticipated. However, other government policy changes, such as the reduced tax on luxury cars, could help offset around 320,000 of those potentially lost EV sales. The government is offering a £3,750 ($5,010) discount on new EVs. As Ford CEO Jim Farley put it, the U.K. government has one foot on the brake while the other foot is on the gas. That makes it hard to go very far or very fast.

To gauge public reaction to the EV road tax, the BBC interviewed Stephen Walton, a resident of Crewe, a city southeast of Liverpool, who bought an electric car for his wife in July 2023 because “she wanted to do what’s right by the environment.” Given the government policy changes, he said that owning an EV “just doesn’t make financial sense, given its higher purchase price and more rapid depreciation.” He says the new pay-per-mile tax “will literally be the final straw.”

“It’s just a nightmare,” he said. “I’ve paid more to do the right thing, and I’m being penalized for it. This will be my first and last electric vehicle because there are no fiscal perks to being an EV car driver.” This is how you turn an EV supporter into an EV critic!

It isn’t just the U.K. that is struggling with its EV industry and net-zero emissions goals. European auto manufacturers face slower-than-expected EV sales, along with confronting aggressive Chinese imports. The auto companies are asking for greater flexibility in the 2035 ban on new ICE vehicle sales. They want to continue manufacturing plug-in hybrids and ICE vehicles to provide a bridge to an all-EV industry that the public is not yet ready for. Decisions on these policies are expected soon.

Ford’s Farley penned an opinion piece for the Financial Times in which he characterized the existing European policies as putting the future of its auto industry at risk. He began by talking about the mandate for a rapid shift to EVs, but “the elephant in the room is that European customers – both individuals and businesses – simply are not buying EVs in big numbers.” That reality screws up all the government and business revenue models.

He chastised the European Union (EU) government for implementing a policy that directed the auto market’s shift and then adjusting it every year. This makes planning and investing by auto manufacturers impossible. Farley stated that the industry needs a framework that “provides a realistic and reliable 10-year planning horizon.”

Farley also discussed the impact of the Chinese auto companies that have targeted the European auto market. He pointed out that Chinese brands have doubled their European market share in just 12 months, reaching a record 5.5% share in August. At the same time, the European EV market share has stagnated at about 16%, well below the 25% share needed to meet the EU’s 2025 targets.

He wrote: “EU vehicle production is now 3 million units below pre-COVID levels. Plants are going dark. In 2024 alone, 90,000 jobs in the automotive industry evaporated. These are the kinds of jobs that sustain European social stability. This is not a transition. It’s more like a wind-down of Europe’s automotive industry.”

After suggesting that auto manufacturers were not asking for bailouts or protectionism to shield inefficiencies, Farley outlined the steps Ford has taken with its 100-year-old auto business in Europe to remain competitive. However, he warned EU officials that actions were needed. “But if Europe wants to avoid becoming a museum of 20^th-century manufacturing, we need an urgent reset and a long-term plan.” His plea for the auto industry could be echoed throughout the European manufacturing sector.

Last week, Thyssenkrupp announced plans to close some electrical steel plants and cut production in response to Chinese imports. It will close its plants in Gelsenkirchen, Germany, and Isbergues, France, from mid-December to the end of the year. The Isbergues plant would then operate at 50% capacity for the first four months of 2026. These plants employ 1,200 workers, whose jobs are increasingly at risk. The company cited competition from low-cost steel imports from China, the challenge of the U.S. tariffs on steel imports, and high energy costs. Electrical steel is a key input into equipment used in the power grid, putting its expansion at risk.

The industrial risks Ford’s Farley described and the actions of Thyssenkrupp reflect the challenges that the EU and its member governments face. Farley highlighted the issue. “But Europe faces a binary choice. It can foster a thriving, competitive auto industry that leads the world in green technology. Or it can cling to unachievable targets and watch as its market is dominated by imports while its own factories rust.”

Are Europe’s leaders prepared to make the proper adjustment, or will they continue down the road of their climate change policies? The former choice offers a vibrant future with high-paying jobs and a better economic outlook for nations and populations. That latter means the further hollowing-out of country economies, with increased social stress, and lower standards of living. Which choice will European politicians make? The U.S. has already made its move.