Examining the EV Revolution
The North American outlook in 2026
EV charging (courtesy of Envato).
We have all seen the Q4 2025 headlines around electric vehicle (EV) sales and they were not good. Ford recorded a $19.5B loss in EV pullbacks (Ref. 1). General Motors posted $6B in EV debt (Ref. 2). Stellantis took a $26B hit which was compounded by underperforming EV sales and recovery from the previous CEO’s disastrous cost-cutting strategy (Ref. 3). Also, notably, was the laundry list of not-long-ago hailed startups that have went bankrupt, often leaving investors, suppliers and employees holding the bag: Bollinger, Canoo, Nikola, ELMS, Lordstown, Fisker, Arrival, Proterra, Volta just to name a few. Many more are on the brink along with dozens of startup suppliers that enticed investors with untold wealth to be gained in the automotive revolution 2.0 (Ref. 6,13,14).
As Cox Automotive recently reported, 2025 posted the best non-EV vehicle sales since pre-COVID and EV sales came in at 7.8 percent. We were on track for 10 percent for three quarters before the incentives expired at the end of September. “2025 unfolded largely as anticipated, with changes to federal EV incentives reshaping the demand patterns that drove record Q3 sales,”. (Ref. 8) How did we go from 2021 when CEOs were claiming that millions of sales were just around the corner to 2026, when we are talking about billions of write-downs due to cancelled EV contracts (Ref. 5)?
2021 was before the lion’s share of the money was spent. There was still time to correct the course - the ship(s) had not yet sunk. Yet here we are. There is great confusion among my friends and colleagues about how industry leaders were this far off the mark. Even to the non-automotive professional, it was obvious that the wild projections could never be met. Yet the CEOs who are paid Hollywood money to get the answers right, all got it wrong.
A good economy can forgive many sins, superficially. The real damage to people and suppliers, however, will take years to clean up. When a supplier is awarded a contract, there is an agreed volume range. For instance, if the minimum target is 500k parts; the supplier does not just get to say they can make 500k parts. They must, in real time, demonstrate they can make 500k parts. This means that by the time that production starts the location, equipment, material, people, packaging, logistics and initial inventory have all been defined in detail. Now, let’s say the 500k orders are not coming in…it’s only 50k orders. Almost immediately, workers need to be laid off because the suppliers must begin repayment of the loans, and the reduced income is not sufficient to sustain the debt. If the volumes stay low; eventually, the manufacturer will issue a volume update, and the supplier can start a claim process for unused equipment, material and related expenses. However, this is often a slow process, and many suppliers cannot ride out the debt long enough to remain solvent. As a result, factories close, people lose jobs, and houses are sold at a loss because people cannot afford to keep them. This is the real side of poor decision making. However, you can rest assured that the people that made those decisions are doing just fine.
The current economy is generally healthy in terms of GDP growth and consumer spending, though stagnating jobs are a moderate concern. The GDP is growing, but jobs are not increasing at the same rate. There is uncertainty regarding tariffs, future EV policy and trade relations which create consumer anxiety for some buyers—potentially putting off new purchases for a year or downsizing purchasing plans (Ref. 10). Additionally, there is concern of China controlling the majority of rare earth minerals that are needed for battery and motor production (Ref. 15).
