U.S. President Donald Trump’s unfriendly stance on electric vehicles (EVs) is set to reshape the auto industry. His “Big Beautiful Bill,” passed in July, will end the federal EV tax credits on Sept. 30.

Until then, eligible buyers can still knock $7,500 off the sticker price—on top of other incentives— but once the deadline is here, the perk disappears. Additionally, the bill has scrapped the penalties for automakers who fail to meet Corporate Average Fuel Economy (CAFE) standards. 

Just a few years ago, under the Biden administration, automakers were doubling down on EVs. Tax breaks, supportive policies and stricter emissions rules pushed companies to speed up their e-mobility efforts.

But things have changed now. Trump’s rollback of incentives and regulations, along with new tariffs on imported vehicles and parts, is changing the economics of EVs in the United States. The shift is forcing legacy automakers to rethink their electrification plans.

Detroit’s Legacy Carmakers Welcome the Shift

For traditional automakers like General Motors (GM Quick QuoteGM - Free Report) and Ford (F Quick QuoteF - Free Report) , the policy change comes as a financial breather. Bloomberg recently reported that this rollback could unlock billions of dollars for Detroit carmakers to reinvest in gasoline-powered and hybrid vehicles.

Ford CEO Jim Farley even called the policy shift a “multibillion-dollar opportunity” for its gas and hybrid business. GM CFO Paul Jacobson echoed the sentiment, saying the removal of fines will start saving the company money as early as 2026.

The reason is simple— without fuel economy fines, Ford and General Motors no longer need to buy regulatory credits from EV-only players. GM has spent $3.5 billion on credits since 2022, while Ford has cut $1.5 billion in similar purchases this year. They can now redirect the money into profitable gas-powered trucks and SUVs.

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GM and Ford Scale Back EV Ambitions

This policy reset is showing up in production plans. GM recently announced it will temporarily cut one shift each for the GMC Hummer EV and Cadillac Escalade IQ between Sept. 2 and Oct. 6. While the Silverado EV and Sierra EV pickups remain in production, GM has delayed its second electric truck plant and Buick’s first EV by six months. Instead, the automaker revealed $4 billion in spending for mostly gasoline-powered vehicles—clear evidence it’s not betting everything on EVs anymore.

Ford is making similar adjustments. The company cut its Rouge Electric Vehicle Center in Dearborn—where the F-150 Lightning is built—to a single shift. It also scrapped plans for an all-electric three-row SUV in Ontario. Instead, Ford is leaning into hybrids, especially in its best-selling truck lineup. Farley has said the Ford Blue division, which builds gas and hybrid vehicles, had been shouldering most of the compliance burden under stricter rules. With Trump’s rollback, that division stands to benefit the most. In fact, Ford is retooling its Oakville plant to make Super Duty F-Series pickups starting next year, reversing its earlier plan to build EVs there.

While Detroit’s legacy automakers view the rollback as a relief, the story looks very different for pure play EV companies like Tesla (TSLA Quick QuoteTSLA - Free Report) , Lucid Group (LCID Quick QuoteLCID - Free Report) and Rivian Automotive (RIVN Quick QuoteRIVN - Free Report) , which relied heavily on incentives and credits to fuel demand and profits.

EV Pure Plays Lose a Safety Net

Tesla, Rivian and Lucid are losing a major source of revenues. That’s because Trump’s rollback not only ends consumer tax credits but also kills the market for regulatory credits.

Under the old rules, automakers that fell short of fuel-economy targets had to either pay fines or buy credits from companies that exceeded the standards—mostly EV makers. Tesla, Rivian and Lucid were prime beneficiaries of this system. Now that the fines are gone, so is the need for credits. And the impact is beginning to show.

Rivian said regulatory credits made up 6.5% of its total revenues in the first half of 2025, but it doesn’t expect any credit sales for the rest of the year. Last year, Rivian earned more than $400 million from these sales. Losing that cushion makes its path to profitability even steeper.

Lucid is facing a similar squeeze. It is already battling demand and profitability challenges, so the loss of this income stream just adds to the hurdles.

Tesla, meanwhile, is taking the biggest hit in absolute dollars. Since 2019, Tesla has generated over $10.6 billion from credit sales—profits that often made the difference during lean quarters. In the last reported quarter alone, Tesla booked $439 million from credits. While that sounds strong, it’s down nearly 50% from the $890 million it earned a year earlier. The decline has been steady, quarter after quarter, and Trump’s rollback threatens to accelerate the slide.

Final Thoughts

GM and Ford, with their deep gas and hybrid portfolios, are among the winners from the EV policy changes. They would gain flexibility, save billions in compliance costs, and push forward with vehicles that still deliver strong margins.

On the losing side are Rivian and Lucid, whose business models counted on credit revenues to partially offset losses from selling EVs. Without that extra income, their road to profitability looks longer and riskier. Tesla, too, faces margin pressure as one of its reliable profit levers disappears.