Auto Tariffs to Raise Car Prices by Nearly $2,000, Impacting EV Adoption

Car buyers in the U.S. face a significant price hike, with auto tariffs set to increase vehicle costs by nearly $2,000 per car, according to a new analysis from consultant AlixPartners. Published on June 19, 2025, the report highlights a $30 billion cost from President Donald Trump’s tariffs, driving up already high U.S. auto prices and potentially reshaping the electric vehicle (EV) market, reports 彭博社. The firm’s annual global automotive outlook warns that these changes could challenge American automakers, especially as EV incentives diminish.

Tariff Impact on Vehicle Costs

AlixPartners estimates that auto companies will pass along 80% of the tariff costs, adding approximately $1,760 to the price of each vehicle. General Motors Co. and Ford Motor Co. have already projected tariff impacts of $5 billion and $2.5 billion this year, respectively. Both companies plan to offset some costs through price adjustments, but the burden will largely fall on consumers.

Mark Wakefield, a global auto market lead for AlixPartners, reportedly told reporters in an online briefing, “These tariffs bring a big wall of cost.” He added, “We see consumers taking the majority of the hit.” The firm also predicts that higher prices will reduce U.S. vehicle sales by about 1 million units over the next three years, though sales are expected to rebound to 17 million in 2030, up 1 million from last year as tariff effects ease.

Shifting Trends in EV and Hybrid Markets

The tariffs coincide with a shift in EV adoption, driven by the Trump administration’s move to reduce and eliminate incentives like the $7,500 consumer tax credit for battery-powered models. Wakefield noted, “This tariff wall is not likely to last forever,” but the loss of incentives will have a longer-lasting impact. He explained, “That will steer car buyers away from EVs as they ‘follow their pocketbook’ and buy traditional gasoline-fueled vehicles.”

As a result, AlixPartners has slashed its EV sales forecast for the U.S., now expecting battery electric vehicles to account for just 17% of auto sales in 2030, down from a previous prediction of 31%. Traditional internal combustion engine vehicles will rise to 50% of sales, up from a prior estimate of one-third, while traditional hybrids will make up 27% (up from 24%) and plug-in hybrids plus extended-range electric vehicles will drop to 6% (down from 10%).

Industry Challenges and Global Competition

These policy shifts could weaken U.S. automakers’ global competitiveness, potentially forcing them to rely on China for EV technology. Wakefield warned, “It makes it much more likely that they end up licensing or joint venturing or otherwise using platforms and EV technologies from China,” he said in an interview.

He further cautioned, “The ‘aggressive take-down of support’ for EVs, will leave American automakers with the dubious distinction of being the world leader in big, gas-guzzling engines, a century-old technology that’s in decline.”

This reliance on China could solidify its position as the global EV leader, while U.S. automakers might lag, potentially holding “the world’s best V8 engines by 2028,” as Wakefield quipped, “They’ll probably also have the world’s only V8 engines by 2028.”

The photo from the article, showing customers browsing new vehicles at a Ford dealership in Miami, underscores the real-world impact on buyers. As tariffs and policy changes unfold, the U.S. auto industry faces a critical juncture, balancing economic pressures with the transition to sustainable transportation. For EV enthusiasts, this signals a challenging road ahead, with potential shifts in investment and innovation toward hybrid and traditional vehicles in the near term.

Photos courtesy of EVXL.