Here’s the reality of EVs. Find out how GM, Hyundai, and Ford will react in 2026

DETROIT – The U.S. auto industry has entered a new phase of all-electric vehicles: reality.

In the early 2020s, the industry was excited about the EV segment, but consumer demand wasn’t as strong as expected, and automakers were watching and planning how to respond as demand slumped. Companies are wasting billions of dollars in capital, Detroit automakers are refocusing on gas-guzzling heavy-duty trucks and SUVs, and now there’s a reversal as many companies acknowledge that policy, not consumers, is driving EV adoption.

“We … have to invest to get to the regulatory environment that they’ve set up. We’ve seen that complete change. One way, 180 degrees, one way, 180 degrees back. That’s the world that automaker CEOs live in,” GM CEO and Chairman Mary Barra said earlier this month at the New York Times’ Deal Book conference.

How automakers like GM, which has invested heavily in EVs, respond over the next year will determine the future of autos in the U.S., industry insiders and experts say.

Barra said it was “too early to tell” what real demand for EVs would be after federal incentives of up to $7,500 for electric vehicle purchases ended in September. He said the industry will find natural demand within the next six months.

Meanwhile, GM continues to reevaluate its EV plans after disclosing a $1.6 billion impact from exiting these investments, with more write-downs expected in the future. ford motor The company announced last week that it expects to record about $19.5 billion in special items related to realigning its business priorities and reducing investment in fully electric vehicles.

“We evaluated the market and made the decision. We’re following our customers where the market is, not where people thought the market would be,” Ford CEO Jim Farley told CNBC last week.

U.S. EV sales peaked in September ahead of the end of federal incentives, accounting for 10.3% of the new car market, according to Cox Automotive. This demand plummeted to 5.2% of preliminary figures in the fourth quarter.

“The long-term direction for electrification remains clear. The future is electrification, but the timeline has been readjusted,” said Stephanie Valdez Streety, director of industry insights at Cox. “In the near future, automakers will continue to adjust their strategies and significantly expand their hybrid offerings to cater to today’s consumers.”

Most industry experts, including those at consulting firm PwC, believe that this is not the end of EVs, but rather that expectations have become more realistic. PwC expects the EV industry to recover toward the end of this decade, with EVs accounting for 19% of the U.S. industry by 2030.

“There’s some pricing in place, as some of the U.S.[automakers]have announced, but we’ve put it in front of customer demand and probably the infrastructure that’s available in the U.S.,” CJ Finn, PwC’s U.S. auto industry leader, told CNBC.

This projected EV market share doesn’t justify the billions of dollars companies have spent on vehicle research, development, and production, so automakers are making significant changes to their plans to give customers more choice between all-electric vehicles, hybrids, and conventional internal combustion engines.

“If you think back a few years ago, it was like, ‘If we don’t go all in on EVs, we’re going to go out of business eventually. The end value is zero,'” Lenny Larocca, a partner at KPMG and a U.S. auto industry leader, told CNBC. “I think we now have a multi-propulsion technology approach that is working. We used to call it ‘powertrain mosaic.'”

For companies already investing heavily in EVs, the change is manifesting itself in a variety of ways.

Barra said GM, by far the leader in such investments in the U.S., will continue to offer its current models but has few plans to expand in the future. Instead, part of the planned production capacity will be used to increase production of heavy-duty trucks and SUVs. The company also said it plans to offer a plug-in hybrid vehicle within the next few years, but did not provide many other details.

Ford said it will refocus its investments on hybrid vehicles, including plug-in models, rather than pure EVs. Cancel the next generation of heavy-duty all-electric trucks in exchange for smaller, more affordable EVs. Rebalance investments in core products such as trucks and SUVs.

and Stellantis is deprioritizing EVs, including its coveted Jeep brand, as it tries to revive sales in the United States.

“We’re all watching to see what the demand is and how the demand continues to grow,” Jeep CEO Bob Broderdorf told CNBC. “The (EV) industry is going to decline. It’s going to slow down. So what is the normal state of affairs for EVs?”

Hyundai is also investing billions of dollars in EVs, but it’s taking a different approach than its peers. Like GM, the company plans to continue offering current models, but new models are also expected. Meanwhile, like Ford, it has decided to place more emphasis on hybrid vehicles and allocate production to a new $7.6 billion plant for Hyundai and Kia vehicles in Georgia.

Companies that had announced ambitious EV plans, including Honda, Nissan, Porsche, Volvo and Jaguar, have also canceled or significantly scaled back their goals. GM also backed away from its pledge to offer EV exclusivity by 2035. This includes some of its own brands that predate that deadline.

Many factors are influencing the current EV market, including industry trends, pressure from Wall Street, and external factors such as political whiplash between the Trump and Biden administrations.

“There’s no question that this policy has had a significant impact on customer demand. NetNet is a market changer,” Farley told CNBC last Monday.

The bullish stance on EVs is tesla. The company remains the leader in U.S. EV sales by a wide margin, and was able to significantly boost its sales and market valuation from Wall Street analysts at the beginning of this decade.

Other automakers are taking notice, people familiar with the matter said, and the industry is looking to replicate Tesla’s success. But what management didn’t realize was that consumers were buying Teslas, not just EVs.

“Tesla wasn’t creating a market for battery electric vehicles; it was creating a market for the Tesla brand,” said Stephanie Brinley, associate director of autointelligence at S&P Global Mobility.

Brinley said Tesla cars are and always will be a “technology purchase” that happens to be a software-first product that becomes an EV. The company also established its own charging network, ignored many quality and growing pains issues, and built a customer base of tech-savvy advocates.

This success led Wall Street to search for the “next Tesla” and spawned an unsustainable number of new companies. From 2019 to 2022, nearly a dozen EV car manufacturers went public, and many related manufacturers also went public. Most went bankrupt amid federal investigations, scandals and administrative turmoil.

“Tesla’s attention woke everyone up, but now there’s competition, and there’s competition from brands that are trusted, known and respected,” Brinley said.

As companies continued to spend, with little success, and “legacy” automakers entered the market by spending billions to bring unprofitable vehicles to market, the excitement surrounding EVs began to fade.

President Donald Trump’s second inauguration this year further dampened hopes for EV profitability. President Trump cut off or eliminated much of the Biden administration’s support and funding for EV sales and production.

The biggest blow was the end of federal incentives of up to $7,500 for EV purchases in September.

“The abrupt end of federal incentives at the end of the third quarter led to a significant increase in demand and sales in the new and used markets,” Cox Interim Chief Economist Jeremy Robb said last week. “Since then, we’ve seen both the pace of sales and new vehicle production growth slow. Next year will be a pivotal year for EVs.”