For the past decade, electric vehicles (EVs) have been heralded as the future of transportation — clean, efficient, and the centerpiece of the fight against climate change. Governments have pumped in subsidies. Startups have promised to revolutionize the auto industry. Consumers were promised a sleek, silent future without fossil fuels.
But today, cracks are beginning to show.
From China’s overextended EV manufacturers struggling to stay afloat, to a political shift in the United States questioning EV mandates, the narrative has started to shift. Mass adoption hasn’t just slowed — it’s showing signs of structural fragility. Is the EV business model fundamentally broken, or is the current downturn a temporary bump in the road?
China’s EV Giants: Rapid Rise, Dramatic Stall
China’s EV market, the largest in the world, continues to dominate global sales with 12.87 million passenger EVs sold in 2024, accounting for nearly 48% of all auto sales. However, behind this headline success lies a deepening crisis.
An intense price war—led by BYD slashing prices on models like the Seagull hatchback to as low as 55,800 yuan ($7,750)—has sparked unsustainable competition among more than 169 automakers, most of which are unprofitable and hold less than 0.1% market share. Years of aggressive subsidies and overproduction have created a glut, raising alarms of an impending industry consolidation where only dominant players like BYD are likely to survive.
Further complicating matters, questionable sales practices such as offloading “secondhand cars with zero mileage” to inflate numbers have triggered investigations from China’s commerce regulators. While domestic demand remains robust, China’s EV exports now face rising geopolitical headwinds.
The U.S. has imposed a 100% tariff on Chinese EVs, while the EU is considering levies of up to 35%, citing unfair trade advantages. These restrictions threaten to unleash a deflationary shock on global markets and strain international trade relations—casting doubt on the long-term viability of China’s EV boom and raising urgent questions about the business model sustaining it.
The U.S. Pivot: Trump’s EV Reversal Signals a Shift
Donald Trump’s reversal of Biden-era EV policies, initiated after his January 2025 inauguration, marks a significant shift in U.S. energy and automotive strategy, aiming to dismantle EV tax credits, roll back strict emissions standards, halt charging station funding, and block state-level gas car bans, driven by a deregulatory, fossil-fuel-friendly agenda and anti-China trade stance.
This move, part of his “Unleashing American Energy” executive order, has sparked uncertainty for the EV market—potentially slowing adoption despite 1.3 million sales in 2024—while clashing with global trends where China leads EV growth.
The Trump vs. Musk ‘Fallout’
Initially aligned with Tesla CEO Elon Musk, a key 2024 campaign supporter who invested $275 million, Trump’s relationship with Musk soured by June 2025 over the “One Big, Beautiful Bill,” a Republican tax package cutting EV incentives. Musk, labeling it a “disgusting abomination,” clashed with Trump, who called him “crazy” and threatened Tesla’s federal contracts, leading to a stock drop of over 14% on June 5, 2025.
The fallout reflects divergent visions—Musk’s sustainable energy push versus Trump’s market-driven, oil-friendly approach—fueling a public feud, with Trump snubbing Musk’s allies and Musk hinting at new political moves, leaving the EV industry’s future in flux amid legal battles and state resistance.
So, What’s Really Going Wrong with EV Adoption?
It would be simplistic to blame politics or consumer hesitancy alone. EV adoption challenges are deeper and more systemic.
1. High Cost and Questionable ROI
While EVs are cheaper to operate over time, their upfront cost remains significantly higher than comparable gasoline vehicles. Battery prices have fallen over the past decade, but not fast enough to make EVs truly affordable to the mass market — especially in developing countries.
Moreover, resale values of EVs remain poor. Many consumers fear that their vehicles will rapidly become outdated due to new battery technologies or software changes. The notion that you’ll lose half the car’s value in just a few years is pushing buyers back toward internal combustion engines or hybrids.
2. Charging Infrastructure Is Still Inadequate
Fast charging is improving, but range anxiety hasn’t gone away. Outside major cities, finding a reliable, fast charger remains difficult. Even in developed countries, EV owners often struggle with inconsistent charging networks. For apartment dwellers or rural residents, owning an EV remains impractical.
Until the charging experience matches the convenience of a five-minute gas station stop, mainstream consumers will hesitate.
3. Battery Supply Chains Are Politically Fragile
EV batteries depend heavily on rare earth minerals like lithium, cobalt, and nickel. Many of these materials are mined in geopolitically sensitive regions — with significant environmental and human rights concerns.
China controls a significant portion of the global battery supply chain. As geopolitical tensions rise, Western governments are becoming wary of relying on China for EV components. This could further slow down rollout or drive up prices if decoupling accelerates.
4. Software and Reliability Issues
EVs rely more heavily on software than traditional cars, and with that comes new problems. Users have reported issues ranging from failed over-the-air updates to mysterious system errors. In markets like Europe, consumers are increasingly vocal about these frustrations.
Auto manufacturers are, in essence, becoming tech companies — but without decades of experience managing user interfaces, data privacy, or cybersecurity.
Is the Business Model Broken?
The current EV business model was built on aggressive scaling, heavy subsidies, and the belief that if you build it, consumers will come. That approach has reached its limit.
EV makers are learning that:
- Subsidies are not a long-term strategy.
- Tech hype doesn’t always translate into sustainable margins.
- Consumers value practicality over novelty.
In China, many companies are now shifting toward consolidation. The Chinese government itself has warned that there are too many EV makers — and survival of the fittest is inevitable. In the U.S., automakers are reintroducing hybrids and plugin-hybrids, perhaps acknowledging that full EV adoption might take longer — or require different strategies entirely.
A More Realistic EV Future
This doesn’t mean EVs are doomed. But it does mean we’re entering a new phase — a more sober, mature phase of the transition.
Here’s what could come next:
- Hybrid Comeback: Hybrids and plugin hybrids may bridge the gap more effectively in regions lacking infrastructure. Toyota’s cautious hybrid-first strategy, long criticized, now appears prudent.
- Battery Innovation: Breakthroughs in solid-state batteries or alternative chemistries (like sodium-ion) could lower costs and reduce dependency on rare minerals.
- Better Infrastructure: Public and private investment in charging networks will be key. Tesla’s move to open its Supercharger network to competitors could set a new standard.
- Business Model Evolution: Subscription services, battery swaps, and even vehicle-as-a-service models may offer new paths to profitability.
- Regulatory Flexibility: Policymakers may need to recalibrate mandates to reflect actual adoption rates and technological maturity — not political timelines.
Conclusion: EVs Aren’t Failing — The Hype Is
The electric vehicle revolution isn’t dead, but the illusions around it are being stripped away.
We’re seeing a necessary recalibration: from blind optimism to grounded realism. EVs remain essential for decarbonizing transport, but getting there will take more than flashy designs and subsidies. It requires infrastructure, smarter policy, supply chain resilience, and above all — consumer trust.
Mass adoption of EVs hasn’t failed permanently. But the current model, driven by hypergrowth and short-term thinking, has hit a wall. The next phase will be slower, messier, and perhaps less exciting — but also more sustainable.
And that, ironically, might be exactly what the EV industry needs.