A Risk Model of the U.S. EV Industry
The U.S. EV market has transitioned from a stable, low-risk environment to a high-risk landscape. The data reveals a brief pandemic shock, a period of calm in 2022, and then a massive surge in risk driven by the foundational shock from domestic political change.
2018
28.9
Strong Economy: A robust auto market created a fertile ground for new entrants.
Market Headwinds: High prices, limited model choice, and sparse charging were major barriers to mass adoption.
2020
47.4
Economic Shock: The Cass Freight Index plummeted as lockdowns froze economic activity.
Supply Chains Falter: The "just-in-time" model was stressed, revealing systemic fragility.
Q2 2022
41.0
Peak Inflation: Soaring consumer and producer prices began to squeeze the market from both sides.
Policy Hope: The impending IRA offered a massive tailwind, providing a powerful counterbalance to economic risks.
Q3 2025
71.1
Incentives Repealed: The removal of key tax credits creates a foundational threat to the U.S. EV market.
Slowing Economy: Weak freight volumes and high consumer debt compound the policy shock.
Total Contribution:
The consumer is getting squeezed. While state-level incentives provide a buffer, the broader economic picture is challenging as the economy is poised to slow down. Consumers face the triple threat of higher interest rates, more debt, and rising prices for essentials, EVs face significant pressure on the total cost of ownership which could deter mainstream buyers.
Total Contribution:
Manufacturers face a difficult cost environment from all sides. Rapid policy shifts are impacting manufacturing costs, and a tight labor market adds to the expenses. These factors will make it difficult for manufacturers to lower prices, and consumers will soon face higher prices on vehicles.
Total Contribution:
This is the single largest driver of risk. The repeal of foundational federal incentives has created a severe shock to the domestic EV strategy. This is compounded by persistent external threats, including high risk from critical mineral supply chains and ongoing disruptions to maritime trade routes.