Good morning! It’s Friday, February 7, 2025, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Trump Scraps Pre-Approved EV Purchases And Charger Funding
It feels like president Donald Trump has already been in office for a lifetime, but it’s actually just been a little over two weeks. In that time, he’s scrapped overseas aid, threatened to start a trade war in North America and cut all kinds of projects that promote diversity in the workplace. Now, the “Home Alone 2” actor is out for electric blood and is directing the Department of Transportation to cut programs that encourage states to purchase electric vehicles and slash funding for new EV chargers in America. Both programs are already federally funded and in progress as we speak.
Under the last administration, more than $3 billion was set aside to support states as they purchased electric cars for their fleets and a further $2 billion was earmarked for new charging infrastructure across America. The DOT has now suspended both projects, despite them already being approved and underway, reports InsideEVs:
In a letter to state transportation departments titled “Suspending Approval of State Electric Vehicle Infrastructure Deployment Plans,” the Federal Highway Administration (FHWA) notified states that their previously approved plans to deploy charging infrastructure under the $5 billion National Electric Vehicle Infrastructure (NEVI) program were no longer valid.
Under the NEVI program, states need to submit plans to the FHWA ahead of each fiscal year, outlining how they plan to use the funds they’re entitled to for that year. During the Biden administration, the FHWA approved the first four (out of five) years of state plans, for fiscal years 2022 through 2025. Although that roughly $3.3 billion in funding was essentially unlocked by states, much of it has not yet been spent or committed (“obligated,” in government speak) to projects.
Many thought that projects already under way or given the go-ahead in the waning light of the Biden administration would be safe from Trump’s cuts. This new directive suggests that this might not be the case as the convicted felon rushes to undo any good that might have been carried out since he was last in office.
This is far from being a closed case, however, as InsideEVs adds that the funding was already approved and signed off by Congress. Under the Impoundment Control Act of 1974, a sitting president can’t stand in the way of funding that has already been appropriated by Congress, as the site explains:
Experts questioned whether the move to rework guidance and rescind funds was legal. That may be good news for the EV owners out there—and potential buyers—clamoring for more widespread, consistent access to public charging stations.
“The administration has every right to remove guidance and replace it with its own. Elections have consequences. But the memo appears flatly inconsistent with the law,” said Andrew Wishnia, a senior vice president at Boundary Stone Partners and the former Deputy Assistant Secretary for Climate Policy at the U.S. DOT. “There is one condition for states to receive NEVI dollars, and that is to develop a plan. Every single state has done so. No greater burden is required of them.”
This is clearly a battle that hasn’t been won on either side just yet, and will probably result in a lengthy court case as Trump’s opponents try to defend the funds set aside for green energy projects.
2nd Gear: Tesla Sales In China Are Also Falling
Things are going from bad to worse for American EV maker Tesla. After the company reported its first drop in sales for a decade over 2024, the automaker has seen demand plummet in Europe as a result of company boss Elon Musk’s extreme-right tendencies, and now sales of the company’s Chinese-made cars are crashing.
Tesla currently assembles around half of its cars in China, but deliveries took a hit last month and fell by more than 11 percent, reports Reuters. The automaker delivered 63,238 Chinese-made EVs last month, as the site reports:
U.S. automaker Tesla’s sales of China-made electric vehicles fell 11.5% to 63,238 units in January from a year earlier, data from the China Passenger Car Association showed on Friday.
Deliveries of China-made Model 3 and Model Y vehicles were down 32.6% from December.
Chinese rival BYD, with its Dynasty and Ocean series of EVs and plug-in hybrids, sold 296,446 passenger vehicles last month, a 47.5% increase on the year, but a 41.8% decline from the prior month.
The latest sales figures for the American brand show it is losing its edge over rivals in China and stiffer competition from legacy automakers. Tesla has already lost its crown as the world’s biggest EV seller to BYD, which markets its cars in China, Europe and several other global markets.
To try and compete, Tesla refreshed its Model Y last month, but production of the new iteration in China was hit by the timing of the nation’s largest holiday. Lunar New Year celebrations in China began in late January this year, compared with February last year, which hit production at Tesla’s plants and impacted sales across the country.
It’s important to note that BYD faced those same issues, and still managed to grow its sales compared with 2024 while Tesla couldn’t. Maybe the shine really is wearing off Tesla’s star?
3rd Gear: EV Buyers Don’t Need Government Cash, Says Volvo
Electric vehicle subsidies are a contentious issue around the world right now. Trump has pledged to slash them, countries across Europe are scaling back support for EV buyers and automakers such as Tesla have said they don’t need EV incentives anymore. Now, Volvo has joined the ever-growing list of automakers who say such support is becoming unnecessary.
Swedish automaker Volvo has pledged to go all electric by 2030 and has already launched a compelling list of electric models to promote the switch. The sales of many of its cars have so far been supported by EV subsidies in places like the U.S., Europe and the UK, but now company boss Jim Rowan says such subsidies might not actually be a good thing, reports Business Insider:
Jim Rowan, the CEO of the Swedish auto giant Volvo Cars, told Business Insider that he disagreed with the idea that governments should subsidize the EV industry, as President Donald Trump unravels federal support for electric vehicles in the US.
“I don’t subscribe to the fact that government should give incentives for people to buy EVs,” Rowan said in an interview after Volvo released its 2024 results on Thursday.
“I think governments have got enough to spend money on, in terms of healthcare and education, that they shouldn’t need to subsidize industries.”
Rowan’s comments don’t mean he’s against any kind of government support for EVs, rather he thinks it should be used to promote electrification by other means. The Volvo boss added that he’d like to “see them do more” about electric vehicle infrastructure around the world and other ways that people could be encouraged to go electric - such as tax breaks.
His comments echo statements made by Elon Musk, who said Tesla would be fine if EV subsidies around the world were scrapped. Rivian boss RJ Scaringe also said subsidies weren’t the only way to sell EVs, and it was up to automakers to produce electric models that people actually want to buy.
Trump has already signed an executive order to end $7,500 tax breaks available to some EV buyers in the U.S., so these auto bosses may get to find out sooner rather than later if tax breaks were the only reason buyers went electric.
4th Gear: Pivoting Back To Gas Power Will Hit Porsche’s Profits
Amid all these worries over the future of EV subsidies, cuts to electric vehicle delivery targets and slashed support for their rollout across America, some automakers have looked back to gas power as a means of staying profitable. That might not be so easy, however, as Porsche warned that reinvesting in gas power will hit its bottom line.
The German automaker, which offers gas, hybrid and electric models in its lineup, has heavily invested in EVs and is due to launch its all-electric Cayenne later this year. Amid struggling sales for its battery-powered cars, the company shifted its attention back to gas power in recent months, and that move could have cost it about $800 million, Automotive News reports:
Porsche warned that expenses tied to expanding its product portfolio with more combustion engine and plug-in hybrid models will hurt its profitability this year.
The company will take an €800 million ($831 million) hit linked to revamping its lineup this year, lowering profit margins, Porsche said on Feb. 6. The margin will drop to the 10 percent to 12 percent range this year, it said.
Porsche is the latest automaker to pivot back towards combustion engine vehicles amid low demand for EVs in Europe and intense competition in China from local rivals.
The company said in November it will develop new combustion-engine derivatives across its model range to meet customer demand as sales of full-electric cars fall.
That $800 million in lost revenue comes as Porsche prepares to develop new gas-powered versions of its Cayenne and Macan, which were initially slated to be battery-powered. The Panamera could also get a new gas-powered model after it was rumored to be switching to EV-only from its next generation.
This half-way house that we’re in with EV investment is proving tricky to juggle for automakers, and I’m sure Porsche won’t be the last to feel the pinch as a result of it.