EV Transition ‘Unraveling’? No, Legacy Automaker Strategies Are Failing

I’ve been covering the EV transition for years, and this week’s headlines declaring the electric revolution is “unraveling” miss the point entirely. What we’re actually watching is the predictable collapse of subsidy-dependent strategies by legacy automakers who never figured out how to build affordable EVs without government life support.

• What: EU softens 2035 ICE ban from 100% to 90% CO2 reduction; Ford takes $19.5 billion writedown; Tesla faces second consecutive year of declining deliveries
• Who: Ford, GM, Stellantis, Volkswagen, Porsche, and Tesla all taking massive financial hits while BYD quietly becomes world’s largest EV seller
• When: EU announced December 16, 2025; Ford charges recorded Q4 2025
• Why it matters: Legacy automakers are retreating to profitable hybrids and gas vehicles while Chinese competition accelerates

The carnage is staggering. Bloomberg reports that in the past week alone, Ford announced $19.5 billion in charges, GM flagged $1.6 billion in EV-related charges, and Volkswagen booked €4.7 billion ($5.5 billion) tied to Porsche reversing from its EV strategy.

Meanwhile, the European Commission just announced it’s backing away from its 2035 ICE phase-out, dropping from a 100% emissions reduction target to 90%, allowing hybrids and even combustion vehicles to remain on sale indefinitely.

The Real Story: Subsidy-Dependent Strategies Are Collapsing

Let me be direct about what’s actually happening here. The EV transition isn’t failing. Specific strategies are failing, specifically the ones that required $7,500 federal tax credits to make expensive electric trucks and SUVs viable.

We’ve been documenting this for over a year. When the federal EV tax credit expired on September 30, 2025, the strategy collapsed overnight. As we reported when Ford killed the F-150 Lightning, Detroit bet on expensive electric trucks that needed taxpayer subsidies to find buyers. Without those subsidies, there are no buyers.

The numbers tell the story. According to BloombergNEF data cited in the Wall Street Journal, EV market share dropped from 12.9% in September to just 6% in November 2025. That’s not EV technology failing. That’s artificial demand evaporating.

BYD Takes the Crown While Detroit Burns

Here’s what Bloomberg buries in its doom narrative: BYD will become the world’s largest battery-electric vehicle seller in 2025, overtaking Tesla. This isn’t a story about the EV transition failing. It’s a story about who’s winning it.

We’ve tracked BYD surpassing Tesla in Europe since April 2025. While legacy automakers lobby Brussels for regulatory relief, BYD is doubling its European dealer network to 2,000 locations and building tariff-proof factories in Hungary and Turkey.

The contrast is stark. As we reported yesterday, Detroit’s Big Three control less than 5% of the global EV market while BYD, Geely, and Tesla together hold nearly 40%. Chinese EV-focused brands launch new models every 1.8 years compared to 5.2 years for non-Chinese brands like Tesla.

Tesla’s Brand Crisis Compounds the Problem

Tesla isn’t immune to the carnage. Bloomberg notes that worldwide vehicle deliveries are poised to drop for the second year in a row, and CEO Elon Musk’s interests have “wandered from pursuing a $25,000 electric car to developing humanoid robots and driverless taxis.”

We’ve covered this extensively. A Yale study found Musk’s politics cost Tesla over 1 million U.S. sales. European sales have cratered 48.5% in October, with declines of 89% in Sweden, 86% in Denmark, and 54% in Germany.

As Reuters analysis revealed and we reported, Tesla is betting its entire future on models designed between 2017 and 2020 while BYD launches cars twice as fast. The irony is rich: Tesla became an industry giant by moving faster than incumbents. Now it’s the incumbent moving slower than insurgents.

EU’s Retreat: Treating the Symptom, Not the Disease

The European Commission’s decision to soften the 2035 target from 100% to 90% CO2 reduction confirms exactly what we warned about three weeks ago: European automakers are treating the symptom, not the disease.

The real crisis isn’t regulatory pressure. It’s competitive collapse. Softening the 2035 target won’t solve the development speed gap where Chinese competitors launch new models in 18 months versus Volkswagen’s five years. It just gives European automakers permission to retreat to profitable hybrids while Chinese brands capture market share.

When Volkswagen posted a €1.3 billion loss en Porsche recorded its first-ever quarterly loss of $1.1 billion, the problem wasn’t regulation. The problem was that Chinese competitors build better electric cars for half the price.

EVXL’s Take

Here’s what I expect: We’ll see continued retreat from legacy automakers through 2026 as they pivot to profitable hybrids and gas vehicles. Tesla’s brand crisis will deepen unless Musk refocuses on the core business. And BYD will solidify its position as the world’s dominant EV manufacturer while Western politicians debate loosening climate rules.

The transition isn’t unraveling. It’s relocating. The question isn’t whether the world will drive electric vehicles. It’s whether Western automakers will build them.

This week validated everything we’ve been documenting for over a year. Subsidy-dependent EV strategies fail when subsidies end. Legacy automakers can’t compete with Chinese cost structures. And Tesla’s technological lead has been eroded by both aging products and self-inflicted brand damage.

For current EV owners, the good news is that your vehicle’s technology remains sound. The charging infrastructure continues to expand. And competition is driving innovation even as corporate strategies shift.

For prospective buyers, this chaos creates opportunities. Manufacturers desperate to clear inventory are offering significant discounts. The question isn’t whether to buy an EV. It’s which manufacturer will still be committed to the technology in five years.

Are you reconsidering your next vehicle purchase based on this week’s news? Let us know in the comments.

The Bottom Line for Prospective Buyers

• Legacy automakers retreating from EVs doesn’t mean EV technology is failing
• BYD and Chinese competitors are winning the transition; consider which manufacturers are committed long-term
• Manufacturer distress means discounts; now may be a good time to negotiate

The Bottom Line for Current EV Owners

• Your EV’s technology fundamentals remain unchanged; batteries are still better than combustion
• Watch software support and service commitments from retreating manufacturers
• Resale values for brands pulling back from EVs (Ford, Stellantis) may decline