The Scale of the Retreat
The numbers are staggering. Legacy automakers have collectively written off approximately $55 billion in electric vehicle investments, prompting a fundamental question: how did the industry's much-heralded electrification push go so wrong, so quickly? The answer, according to a growing chorus of industry analysts and observers, lies not in any single failure but in a convergence of structural disadvantages, misaligned incentives, and a lack of genuine commitment to the EV transition.
Perhaps the most telling indicator came from General Motors. When the company announced it would scale back EV production, its stock price actually rose -- a market signal that investors viewed the company's electric ambitions as a drag on profitability rather than a growth engine. The pattern repeated across Detroit: Ford acknowledged billions in losses from its Model e electric division, and Stellantis pulled back on multiple electrification programs.
Selling Below Cost Was Never Sustainable
At the core of the problem is a straightforward manufacturing challenge. Detroit automakers consistently sold their electric vehicles below production cost, unable to achieve the economies of scale or supply chain efficiencies needed to make them profitable. Unlike purpose-built EV manufacturers that designed their operations from the ground up around electric powertrains, legacy companies attempted to bolt EV production onto existing manufacturing frameworks designed for internal combustion engines.
The result was predictable: high per-unit costs, quality inconsistencies, and vehicles that struggled to compete on both price and capability with offerings from companies like Tesla and emerging Chinese manufacturers. The irony is that profitable EV production exists globally -- just not in Detroit. Chinese automakers, in particular, have achieved profitability at price points below comparable gasoline vehicles, a feat that has eluded their American counterparts.
Subsidies Without Accountability
Government incentives intended to accelerate the EV transition may have actually enabled complacency. Legacy automakers leveraged their stated electrification plans to secure a generous array of support: 30 percent tax credits, direct grants, subsidized loans, and various other incentives tied to EV manufacturing commitments. These funds were used to upgrade facilities and invest in research and development.
The catch, however, is that many of those same upgraded facilities are now being used to produce internal combustion vehicles, with no mechanism to claw back the subsidies. Critics argue that the incentive structure effectively rewarded automakers for making promises about future EV production without holding them accountable for delivering on those commitments at scale.
Protectionism Backfired
Trade policy added another layer of dysfunction. Steep tariffs on Chinese-made electric vehicles -- imposed by both the Biden and Trump administrations -- shielded domestic manufacturers from the most competitive global EV producers. While the intent was to protect American jobs and manufacturing, the practical effect was to eliminate the competitive pressure that might have forced Detroit to innovate faster and reduce costs more aggressively.
In markets where Chinese EVs are available, EV adoption rates have accelerated dramatically. In the United States, the closed-market approach removed the urgency for domestic manufacturers to match the price and performance benchmarks being set overseas. The result is a domestic industry that spent billions without developing the capability to compete on a level playing field.
Why It Matters
The $55 billion writeoff is more than an accounting entry. It represents a missed opportunity to build a globally competitive American EV industry during a critical window. As legacy automakers retreat to the familiar comfort of profitable gasoline vehicles, the question becomes whether the United States can course-correct before the gap with international competitors becomes insurmountable. Without either genuine competitive pressure or a fundamentally restructured incentive framework, the next round of EV investments may simply repeat the same expensive cycle.
