Slowing Pace of Electric Vehicle Adoption
The electric vehicle (EV) industry has undergone significant shifts from 2021 to 2025, characterised by strong growth, evolving government policies, competitive pressures, and industry challenges.
**2021-2023: Growth and Subsidy Changes**
The global EV fleet expanded rapidly, driven by increasing consumer interest and automaker commitments. However, major subsidies and EV tax credits began tapering off in many regions, notably in Europe and China, forcing automakers to offer deeper discounts to sustain sales growth.
**2024-2025: Industry Adaptation and Market Dynamics**
In the US, the continuation of the $7,500 federal EV tax credit was debated, creating urgency among buyers. Despite some early 2025 delivery shortfalls for Tesla, analysts anticipated a strong rebound, especially in the third quarter, fueled by the anticipated expiration of tax credits and additional government support programs.
Tesla and other automakers aggressively pursued price reductions and expanded market access under new trade deals such as the US-UK agreement, facilitating growth in international EV sales. The Asia-Pacific region experienced explosive growth in EV sales, driving demand for battery testing, inspection, and certification, supporting the maturation of local EV supply chains and infrastructure.
**Industry Challenges and Bankruptcies**
While the data does not specify particular bankruptcies of major automakers, the withdrawal of subsidies and competitive market pressures likely contributed to financial stress on smaller or less established EV companies. Automakers were compelled to reduce prices and innovate to maintain sales volumes.
COO Joseph Fadool at automotive supplier BorgWarner Inc made the "difficult" decision to exit the charging business and consolidate battery manufacturing operations. In June 2022, automotive supplier Marelli filed for bankruptcy, citing a "rapid volume reduction" in EV components demand as a factor.
**Summary of Key Events**
- Subsidies reduced in Europe and China (2022-2023): Forced price cuts, challenged sales growth - US EV tax credit continuation debated (2024): Ongoing incentive for buyers - Tesla delivery shortfalls, but recovery expected (Early 2025): Market volatility with hopeful turnaround - US plan to end $7,500 federal EV tax credit by Sept (Mid-2025): Created urgency; potential price adjustments - US-UK trade deal lowers tariffs on UK EV exports (2025): Boost for UK EV manufacturers - Asia-Pacific battery testing market projected boom (2025): Supports EV supply chain growth
The trends in the electric vehicle industry have led to a ripple effect, with Marelli Corp entering Chapter 11 being one example. Honda has paused or backed off on EV-related goals, particularly in the short-term. Goldstein, an analyst at Morningstar Research, stated that electric vehicle sales are heavily influenced by government actions, including subsidies and regulations.
Looking forward, Goldstein expects that the infrastructure for electric vehicles will improve, but it may take until 2028 for consumers to feel confident taking a road trip in an EV. In 2023, the first wave of EV-related bankruptcies occurred, primarily affecting start-ups like Lordstown Motors and Proterra Inc. Goldstein stated that fixing both the price and infrastructure will take time, with prices coming down as automakers shift to mass production and create more affordable models.
References: [1] Reuters, "Tesla Delivery Shortfalls, U.S. Tax Credit Expiration Could Drive Demand," Yahoo Finance, 2025. [2] BloombergNEF, "Global Electric Vehicle Outlook 2022," 2022. [3] International Trade Administration, "US-UK Trade Agreement," 2022. [4] Wood Mackenzie, "Asia-Pacific Battery Testing Market," 2025.
- The reduced subsidies in Europe and China (2022-2023) necessitated price cuts by automakers, potentially creating financial stress for smaller EV companies and contributing to the trend of industry consolidation, as seen with the exit of charging business by BorgWarner Inc's COO Joseph Fadool.
- In the face of competitive pressures and the requirement to reduce prices, technology played a crucial role in the industry's adaptation, with automakers like Tesla and those in the Asia-Pacific region aggressively pursuing price reductions and expanding market access under new trade deals like the US-UK agreement, thereby facilitating growth in international EV sales.
