COMMENTARY

THE global automotive industry’s transition to electric vehicles was always going to be complex, capital-intensive, and uneven. But nobody could have predicted the devastation inflicted on legacy OEMs accounts inflicted by Western governments bent on forcing sales of electric vehicles ahead of the infrastructure to support EVs and the public’s desire to own them.

What has become increasingly clear over the past three years, however, is that the pace and scale of investment by many traditional manufacturers have significantly outstripped current consumer demand and infrastructure readiness.

Between 2022 and late 2025, major US and European automakers invested heavily in dedicated EV platforms, battery manufacturing, and supply chains. Public disclosures and analysis estimates that cumulative losses linked to EV programs across several large manufacturers now exceed US$100 billion ($A160 billion) over that period.

While some companies report EV performance transparently, others aggregate results, making precise figures difficult to isolate. Nevertheless, the direction of travel is clear: returns have not yet matched expectations.

The scale of capital at risk is also becoming clearer. Analysis of public disclosures estimates suggest that EV-related write-downs and operating losses across a group of major global manufacturers now total approximately US$114+ billion:

These include (US$)
Ford – $19.5bn
GM – $6.0bn
Stellantis – $26.5bn
Volkswagen – $7.0bn
Lucid and Rivian – $30.2bn
Others – $24.8bn

The write-offs were against roughly the US$188+ billion (GM $35bn, Ford $50bn and Volkswagen $131bn) in EV and battery investments announced over a similar period for the US market alone. 

While not all of this capital has yet been fully impaired, the gap highlights the extent to which anticipated returns have lagged initial expectations, reinforcing the need for greater capital discipline, more realistic demand forecasting, and a recalibration of investment timelines.

For dealers, these write-downs are not an abstract balance-sheet issue. 

Capital diverted to cover EV impairments inevitably constrains future investment in core R&D, product refresh cycles, and model diversity. 

As manufacturers seek to preserve cash and restore returns, we are already seeing extended model lifecycles, delayed facelifts and a narrowing of variant choice, particularly in high-volume segments critical to dealer throughput.

Steve Bragg

The risk is a slower cadence of new product, reduced showroom momentum, and increased inventory pressure at the retail level, all of which place additional strain on dealer profitability during an already challenging transition period.

Much of this investment acceleration was driven by a combination of regulatory mandates, emissions targets, and government incentives, particularly in the United States and Europe. 

In the US, the Inflation Reduction Act and associated subsidies assumed rapid mass adoption of EVs. That adoption has proven more sensitive to incentives, pricing, and practicality than initially forecast.

This was evident in late 2025, when the US EV sales temporarily surged ahead of the expiration of federal tax credits, only to decline sharply once those incentives ended.

Quarterly sales volumes fell materially, and EV market share retraced after briefly exceeding 10 per cent. 

For the first time in several years, annual EV sales declined year-on-year, highlighting the extent to which demand remains policy-driven rather than organic.

At the retail level, affordability continues to be a major constraint. Average EV transaction prices remain well above comparable internal combustion and hybrid vehicles. 

Combined with concerns around charging infrastructure, range suitability and residual values, many consumers have opted for hybrids or retained traditional powertrains, particularly in SUV and light commercial segments.

European manufacturers are facing similar pressures. Ambitious emissions regulations, rising costs and softening demand have coincided with the rapid emergence of lower-cost Chinese EV competitors.

This has forced several global OEMs to delay or cancel EV programs, extend the life of combustion and hybrid platforms and to seek regulatory flexibility to rebalance their product strategies.None of this suggests that electrification will not play a central role in the future of mobility. Rather, it reinforces a lesson the industry has learned before: technology transitions rarely follow linear policy timelines. 

Successful strategies will be those that balance regulatory compliance with commercial reality, consumer readiness, and sustainable profitability.

For dealers, distributors, and OEMs alike, the focus now must shift from headline investment announcements to execution discipline…right-sizing EV portfolios, managing inventory risk, protecting dealer profitability and maintaining choice for consumers as the market continues to evolve.

In Australia, these global lessons are highly relevant as we move toward the introduction of the New Vehicle Efficiency Standard (NVES). While the objective of reducing fleet emissions is broadly supported across the industry, the current design and implementation timeline risks repeating mistakes seen offshore. 

Australia remains a geographically large, infrastructure-constrained market with a vehicle mix heavily weighted toward utes, SUVs, and light commercial vehicles. These are segments where affordable, fit-for-purpose EV alternatives remain limited. 

Attempting to force rapid behavioural change through regulation, without sufficient consideration of consumer affordability, charging availability, and model supply, risks distorting the market rather than delivering a smooth transition.

For dealers and consumers, the concern is not the direction of travel, but the speed and rigidity of the mandate. 

NVES penalties will ultimately be priced into vehicles, placing upward pressure on new car costs at a time when households are already facing significant cost-of-living pressures. Without a parallel focus on hybrid recognition, transitional technologies, and realistic compliance pathways, Australia risks reducing consumer choice, slowing new vehicle turnover, and inadvertently extending the life of older, higher-emitting vehicles. 

A more balanced, technology-neutral approach, one that allows the market to evolve rather than be forced, would better support emissions reduction while preserving industry viability and dealer profitability.

The EV transition is not failing, but it is recalibrating. Those who adapt pragmatically, rather than ideologically, will be best positioned for the next phase.

Steven Bragg is the lead partner of  Motor Industry Services at Pitcher Partners