U.S. EV Development Stalls Amid Market Shifts Driven by Trump Policies
Liam Butterworth, CEO of Dowlais, the parent company of powertrain supplier GKN Automotive, said: "As the transition to fully electric vehicles slows, the market will continue to be dominated by internal combustion and hybrid vehicles for the foreseeable future. We're seeing a significant reduction in the number of new battery-electric vehicle platforms being launched."
Although the U.S. lags behind China and Europe in EV adoption, it remains a critical market where automakers and parts suppliers seek substantial returns on their electrification investments.
However, under Trump's leadership, the U.S. Environmental Protection Agency last week announced plans to repeal vehicle emissions regulations that would have required automakers to produce more EVs. This marks the latest in a series of sweeping efforts by the Trump administration to roll back policies encouraging EV production, following the cancellation of the goal for EVs to make up over 50% of new car sales in the U.S. by 2030.
These policy shifts have already led automakers to scale back their EV plans, affecting suppliers. Dowlais reported a 6.4% year-over-year revenue decline in 2024, attributing over two-thirds of the drop to weak sales in its ePowertrain product line. The company now plans to reduce investment in its e-drive business, which includes electric motors, inverters, and gearboxes.
In 2024, the ePowertrain division accounted for 27% of GKN Automotive's revenue, while its Driveline division—focused on ICE vehicles—contributed 57%. Butterworth said lost business from EV platforms has been partially offset by automakers' decisions to extend the life of ICE platforms. "In North America, we're seeing many existing contracts extended by two, three, even four years," he noted.
Dowlais is being acquired by U.S. powertrain supplier American Axle. Butterworth said the deal will support GKN Automotive's growth in North America. "The merger is a great fit for us because American Axle is very strong in the full-size truck segment." The two companies expect to realize a total of $300 million in synergies from the merger.
GKN Automotive has also been affected by the EV slowdown in Europe. The company cited three EV projects and one U.S. program as key contributors to the decline in e-drive system volumes. "In Q1 last year, when some European markets removed all EV incentives, EV sales dropped significantly—especially in Germany and Italy," said Butterworth.
He added that Fiat's 500e project was impacted by these incentive changes. "The cost of the 500e went up by several thousand euros, which essentially killed market demand for that model."
As more automakers move to in-house production of electric drive systems, suppliers in this field are facing serious challenges. This shift allows automakers to leverage their manufacturing advantages and gradually replace traditional engine production. As a result, commoditization is intensifying, price competition is growing, and customer pressure for cost reductions is squeezing supplier margins.
"The macro environment across the auto industry is undergoing structural changes around tariffs, geopolitics, regionalization, and evolving customer needs," Butterworth said, "creating strong headwinds for many auto parts suppliers."