Gas-Guzzlers Return to America – How Long Before They Fade?

  • Marco
  • Aug 08, 2025

The Shift in Automotive Regulations and Market Dynamics

The automotive industry is witnessing a significant shift as regulatory changes allow manufacturers to revisit the production of large internal combustion engine (ICE) trucks and SUVs. This move comes at a time when federal incentives for electric vehicles (EVs) are diminishing, and new tariffs imposed by the Trump administration are affecting various sectors, particularly the automotive industry.

Learn more: Trump Imposes 100% Tariff on Computer Chips: What It Means for Your Wallet

For many automakers, this situation presents both challenges and opportunities. While some see the potential for increased profits from gas-powered vehicles, others are concerned about the long-term implications of such a strategy. The question remains: is it a wise decision to pivot back to ICE vehicles when the global trend is clearly moving towards electrification?

Regulatory Rollbacks and the Big Three Automakers

The recent regulatory rollbacks have created an environment where the big three automakers—General Motors, Ford, and Stellantis—are considering a return to producing larger ICE vehicles. However, this shift is not without its complexities. According to a report from the Wall Street Journal, while these manufacturers are indeed reviving their ICE offerings, the situation is more nuanced than it appears on the surface.

Big ICE vehicles remain profitable for these brands, but the demand for fuel-efficient cars is still strong among American consumers. Most automakers are continuing their EV plans, albeit on a modified timeline. Industry experts like Adam Lee, chairman of Maine-based Lee Auto Malls, emphasize that while Americans enjoy buying large vehicles, there is a concern that a truck-heavy strategy might not be sustainable in the long run.

Matt Bowers, owner of multiple dealerships, notes that the demand for internal combustion engines is currently high. Consumers who prioritize fuel efficiency are often drawn to smaller SUVs rather than EVs. He believes that regulatory changes allowing companies to build what people want is a positive development.

Despite these shifts, major automakers like General Motors and Ford continue to invest heavily in battery technology and EV development. GM is making significant investments in battery plants, while Ford is set to debut a new EV, which it refers to as a “Model T moment.” Stellantis, however, has not been as vocal about its EV plans.

Honda’s Struggles with EV Investments and Tariffs

Honda is facing its own set of challenges, with profits halved due to a combination of EV misfires and the impact of tariffs. The company’s investment in its 0 Series models and incentives for existing GM-based models has led to significant financial losses. According to Automotive News, Honda spent over $12,000 per Prologue and up to $21,000 per ZDX during the April-June quarter, contributing to a $780 million loss.

Despite these setbacks, Honda remains committed to its planned launches of the Ohio-made Honda 0 Series and Acura RSX EVs. The company is working to mitigate the impact of these challenges on its future EV projects.

Carvana’s Rise in Used EV and PHEV Sales

While the EV market faces its share of difficulties, the used EV and plug-in hybrid electric vehicle (PHEV) market is experiencing a surge in sales. Carvana, a leading direct-to-consumer used car store, has seen a significant increase in EV and PHEV sales. In 2023, these models accounted for only 2% of overall sales, but this figure has risen to 9% as of the last quarter.

Christina Keiser, Executive Vice President of Strategy at Carvana, highlights the growing interest in electrified vehicles. The availability of a wider selection of electrified SUVs has made them increasingly popular among buyers. The Tesla Model 3 and Model Y lead the used EV market, while the Jeep Wrangler 4xe is the most popular PHEV.

The Potential for Collaboration with China

As the challenges faced by automakers like Honda and Ford become more apparent, there is a growing discussion about the potential for collaboration with Chinese partners. While importing Chinese brands is not the focus, there is interest in leveraging joint ventures and partnerships to develop EVs that could be sold in the U.S. For example, Honda’s Ye series is designed for the Chinese market, raising questions about why it cannot be adapted for the U.S. market.

However, concerns related to battery sourcing, software, and national security issues present significant barriers. Despite these challenges, some industry observers believe that finding a way to overcome these obstacles could be a strategic move for American automakers.

Conclusion

The automotive industry is navigating a complex landscape shaped by regulatory changes, market dynamics, and global trends. While some automakers are exploring the potential of ICE vehicles, others are focused on the long-term benefits of electrification. As the industry continues to evolve, the decisions made today will have lasting impacts on the future of transportation.

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