California’s Electric Vehicle Aspirations Impacted by Tariffs
The future of electric vehicles in the United States faces a significant hurdle with the recent implementation of tariffs by the Trump administration. These tariffs, affecting a wide range of imported goods, are poised to drive up the prices of electric vehicles, potentially putting California’s ambitious climate goals at risk.
The global supply chains that the automotive industry relies on for raw materials, parts, and vehicle assembly are intricately interconnected, with key players including the United States, Canada, and Mexico. Danny Cullenward, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania, explains that the imposition of tariffs at every border crossing could have far-reaching consequences for vehicle manufacturing.
In a move that has sent shockwaves through the industry, President Trump announced a 25% tariff on all imported vehicles and specific automobile parts. This tariff, if upheld, is expected to lead to an increase in the prices of all vehicles sold in the U.S., whether gas-powered or electric. Gil Tal, director of the Electric Vehicle Research Center at UC Davis, expresses concern that this price hike may deter consumers from purchasing new cars altogether, which could have negative implications for both the economy and the environment.
Of particular concern is the impact on electric vehicles, which are poised to bear the brunt of the price increases. The lithium-ion batteries that power EVs are traditionally made with rare-earth metals such as cobalt and nickel, which are primarily sourced from overseas. While some American automakers are transitioning to alternative batteries that do not rely on these scarce minerals, the majority of the largest EV battery producers are located in countries like China, South Korea, and Japan.
President Trump’s recent announcement of a 125% tariff on all Chinese goods further complicates the situation, as many EV batteries are still sourced from China. This move is expected to have varying effects on different car companies, with some being hit harder than others.
In response to the growing concerns surrounding air pollution and greenhouse gas emissions, the California Air Resources Board introduced the Advanced Clean Cars II regulation in 2022. This regulation mandates an increasing percentage of new car sales to be zero-emission vehicles over the next decade, culminating in a statewide ban on the sale of new gas-only cars in 2035. Liane Randolph, chair of the state Air Resources Board, emphasizes the detrimental impact of the newly imposed tariffs on the American auto industry, highlighting the risks to workers, consumers, and domestic manufacturing.
California has long been a leader in electric vehicle adoption, with one in four cars sold in 2024 being zero-emission or plug-in hybrids. However, data from the California Energy Commission reveals that around 40% of all EVs and plug-in hybrids sold in California in the fourth quarter of 2024 were manufactured by foreign automakers. Despite Tesla’s dominance in the EV market, its sales have seen a decline, partly attributed to controversies surrounding CEO Elon Musk.
While California has made significant strides in promoting the adoption of electric cars, challenges remain in transitioning heavy-duty trucks and buses away from fossil fuels. Foreign automakers currently dominate these sectors, with many public transit agencies in Southern California opting for buses from BYD, a Chinese company. The average cost of a new electric car remains higher than that of a gas-powered vehicle, although federal incentives of up to $7,500 are still available for EV purchases.
To overcome the obstacles posed by tariffs and continue the growth of EVs in California, experts emphasize the need to keep additional costs low, particularly the cost of electricity. By ensuring that driving an electric vehicle is more affordable than a gas-powered alternative, the state can maintain its momentum towards a greener, more sustainable future.
