Reprinted from , San Francisco Chronicle 10/31/2025
On his first day back in office, President Donald Trump signed an executive order to end the
government’s $7,500 federal tax credits for electric vehicles that had been put in place with
the passage of the Inflation Reduction Act.
After that, his administration moved to repeal environmental mandates that also helped car
manufacturers plan for future demand.
The tax credits, which ended on Sept. 30, have helped move a boatload of EVs. During the
third quarter of 2025, an estimated 410,000 EVs will be sold. That marks a new sales peak.
California accounts for about a third of the EV sales, even withstanding the lower demand
for Teslas. Last year, just under 1 in 4 new car sales were electric.
But if you missed out on taking advantage of a federal rebate during the recent surge, don’t
despair.
Despite Trump’s acts of sabotage, EVs will continue to get built, and they will continue to
become more affordable. In part, that’s because an electric car has only 20 moving parts
compared to about 2,000 in the drivetrain of a gas car. EV drivers end up with lower
maintenance costs and spend less time in the repair shop.
Electric vehicles are essentially a battery on wheels, and those batteries are getting more
durable and faster to recharge. The batteries that power EVs are on an upswing for three
main reasons:
First, batteries are critical for the Department of Defense. Advanced lithium-ion batteries
propel stealthy torpedoes, precision drones and unmanned space vehicles. They also power
ground-to-ground communications and portable GPS packs that soldiers carry. The
government has added critical battery materials to the National Defense Stockpile. This
attention to batteries spills over to the consumer market and improves each generation of
vehicles.
Second, the government is not just a passive consumer; it’s actively building the domestic
supply chain for lithium, copper, rare earth minerals and more. Last week, it began to broker
a deal with Lithium Americas Corp. for a stake in its supply. In July, the Pentagon took the
unusual step of acquiring a 15% stake in MP Materials, a rare earth producer. Rare earths are
not as uncommon as their name suggests, and a stockpile is considered critical for national
security.
The government has pledged to buy 100% of MP magnets for 10 years. These magnets are a
key component for motors in electric cars, typically two or four motors per vehicle. Using a
domestic source for rare earth minerals helps both the defense industry and automakers
bring down supply chain costs.
Third, battery makers and automobile manufacturers also have a tailwind from a tax credit
from former President Joe Biden’s administration that remains on the books. The 45X
Advanced Manufacturing Production Credit, a cornerstone of the Inflation Reduction Act,
spurs private investment for battery development. And, like the investment in MP Materials,
it incentivizes the supply chain. Importantly, most of the 45X credits for critical minerals
stay on the books through 2033 and allow companies to sell them to a third party, providing
funds, for instance, for a new EV startup. There’s a precedent: For many years, tax credits
accounted for a lion’s share of Tesla’s profits.
The fundamentals of batteries also work in favor of electric vehicles, even without the $7,500
incentive. Since 2010, the average cost of a lithium-ion battery pack has dropped from over
$1,000 per kWh to under $100 per kWh. This cost decline is not a fluke; it’s a predictable
outcome of economies of scale, competition and advanced technology.
Electric vehicles are now reaching price parity with gasoline vehicles. Prices should
continue to drop with more vehicles in production, particularly since China continues to
ramp up its manufacturing. Ironically, we may be helping them do that through the global
supply chain.
Unlike gasoline, batteries can be recycled in closed-loop manufacturing. Old EV batteries
are chemically reprocessed to recover essential materials like lithium and copper. The
“black mass” that’s created, a mix of recycled metals, is the new mother-lode. But 95% of the
U.S.-produced black mass is sold to China, which helps it produce cheaper vehicles. As we
strengthen our supply chain, we also drive down the cost of making EVs in the U.S.
The Trump administration may not have been kind to electric vehicles, but it has not killed
them, either. At the end of the day, an electric car is a battery on wheels, and battery
advancements are rocketing. The owners who have these battery-driven cars like them.
According to a recent JD Power Survey, 94% of drivers don’t plan to go back to gasoline cars.
In March, there was an iconic picture taken on the White House lawn. A smiling Elon Musk
and President Trump exchanged the keys (or fob) to a bright red Tesla S model.
Thereafter, EVs got caught in the crosshairs of red and blue politics, but they won’t stay
there for too long.