EVs hit the brakes

Gas is back in the driver’s seat.

Ford sold 2.2 million vehicles in the US last year, a 6% increase from 2024 and its strongest annual performance since 2019. The company finished the year as the third-largest automaker in the US, trailing Toyota Motor and General Motors. Shares are up 2.45% today.

The gains came from the old playbook: Gas-powered vehicles accounted for roughly 86% of sales, while hybrid volumes climbed nearly 22%. EVs moved in the opposite direction: Ford’s electric vehicle sales fell 14.1% for the year, capped by a roughly 52% plunge in the fourth quarter.

EV demand decelerates

Ford’s sales mix underscores a broader EV cooldown. In the US, demand is entering an “EV winter,” with a meaningful rebound unlikely until 2027–2028, Boston Consulting Group’s global lead for EVs and energy storage Nathan Niese told Bloomberg.

Policy headwinds are accelerating the slowdown. The rollback of fuel-economy standards and the loss of $7,500 in EV tax credits have weighed on demand, with BloombergNEF expecting EV sales growth of just 12% from 2025, well below the 23% pace seen last year.

The pullback isn’t just a US story. China, the world’s largest EV market, is also cooling as government support fades, and even industry leaders are feeling it. BYD, which recently overtook Tesla as the world’s top EV seller, posted its weakest annual sales growth since 2020, a notable signal for the sector.

The road ahead

Automakers are recalibrating for a slower, more selective EV market. Ford has taken $19.5 billion in charges tied to a major overhaul of its EV strategy, including scrapping the electric F-150 Lightning pickup and shifting investment back toward gas and hybrid vehicles. The reset reflects years of losses in EVs, but Ford says the changes put its electric business on track to reach profitability by 2029.

At the same time, the EV pullback is reshaping where investment is flowing across the auto ecosystem. As EV expansion slows, spending is shifting toward automation and software. One player joining that shift is Nvidia, which is pushing deeper into autonomous driving, rolling out new AI models and software platforms to help vehicles navigate complex driving environments.

EVs face a tough year ahead, and investors should brace for a bumpy ride.—SY