Did Trump just give China a free pass to dominate the global EV market?

On January 20, 2025, immediately after assuming office as the 47th President of the United States, Donald Trump signed a series of executive orders, including the ‘Unleashing American Energy'.

This executive order halts federal funding for electric vehicle (EV) infrastructure and promises a "level" playing field for gasoline-powered vehicles, marking a significant policy shift. It also hints at further rollbacks, including eliminating federal tax credits for EV purchases and reversing a waiver that allows California to enforce stricter car emissions standards.

During his inaugural address, Trump derided the "Green New Deal" and Biden-era EV incentives, claiming these policies had unfairly undermined traditional energy industries. "We are putting American energy back in American hands," Trump declared, framing the rollback as a move toward energy independence.

However, policy experts and industry analysts caution that the impact may be far from Trump’s stated goals. Critics argue that the rollback could cripple the US electric vehicle industry and hand a competitive advantage to China, the global leader in EV production.

Shaun Rein, founder of China Market Research Group (CMRG), describes Trump’s move as short-sighted as global consumers and governments are increasingly adopting new energy vehicles. CMRG is a Shanghai-based business and investment consultancy firm.

“In the Global South, Europe, and ASEAN region, consumers and governments are pushing for EV adoption. By unleashing the oil industry and cutting EV subsidies, Trump is effectively giving Chinese EV makers a free pass to dominate these markets,” Rein, an author of four books on China including his latest The Split: Finding the Opportunities in China’s Economy in the New World Order, tells TRT World.

"In the long run, this rollback will hurt the ability of American automakers like GM and Ford to compete internationally," he notes adding that Chinese companies are poised to become global players by producing "better quality electric vehicles at a better price than their American counterparts."

China is already a global powerhouse in EV manufacturing. Brands like BYD, Nio, and Xiaomi have surged ahead with superior innovation, quality, and pricing.

“Over the next decade, the world better get ready for these Chinese brands to become global players,” Rein says, emphasising that Trump’s policy shift puts the United States at a competitive disadvantage.

No overcapacity in China

Global EV sales hit a record 17.1 million units in 2024, driven by surging demand for passenger and light-duty EVs, according to EV research firm Rho Motion. China led the market with 11 million units sold, a 40 percent increase from the previous year.

The US has often accused China of “overcapacity” in EV manufacturing, while Beijing has dismissed the allegations as a “complete fallacy.”

“There is no overcapacity in China,” asserts Rein, pointing out that Chinese EV makers continue to gain traction globally. “Consumers in Australia, Thailand, Kenya, and even Europe want Chinese EVs because they offer the best technology at the best price,” he says.

Trump’s rollback, Rein argues, reflects a short-term strategy aimed at protecting the oil industry and appeasing donors, rather than fostering long-term competitiveness. “In many ways, Trump is ceding the ability for America to compete internationally in the auto sector,” he added.

US EV sector faces Tesla monopoly

The immediate market reaction was telling. Shares of American EV makers like Rivian and Lucid and EV charging companies such as EVgo plummeted, and even Tesla—led by Trump-ally Elon Musk—saw a decline.

Rein believes that most American EV makers, apart from Tesla, are unlikely to survive without subsidies following Trump’s latest executive order.

“This is pretty much the death knell for all American EV players—who were anyway unable to compete with the Chinese firms—except Tesla,” he says, explaining that

Rein believes that while in the short term, Tesla’s “overinflated” stock could face challenges, Musk’s firm might eventually benefit in the medium-to-long term due to the “lack of domestic competition.”

“The US tariffs and bans on Chinese EV companies mean that Musk is going to have almost a monopoly now on the American electric vehicle sector because no one's going to be able to exist without subsidies on the American side, and the Chinese can't come in to sell,” he explains.

Isolationist Trump undermines climate goals

Trump’s decision to halt federal funding for new EV infrastructure is not just a policy rollback—it’s a step backwards in America’s climate leadership.

“Trump has already taken the US out of the Paris Climate Agreement and other global organisations such as the World Health Organization (WHO). This move to effectively roll back from EV policy further erodes America’s ability to lead in clean energy diplomacy,” Rein notes.

Describing the US President’s decision as “shameful”, he attributes it to Trump’s focus on short-term gains for his political donors in the oil industry.

“Trump is an isolationist and a protectionist who doesn't care about American prestige and influence except for hard power on the global scale. So, this certainly is going to hurt the world's goals of becoming more carbon neutral,” says Rein.

“Trump is almost 80 years old; he doesn’t care about what happens 20 years down the line,” he adds.

US ceding leadership to China?

In stark contrast, China is ramping up EV production while advancing global climate initiatives. Rein highlights how China’s leadership is taking a long-term approach to innovation, particularly in new energy vehicles.

“[Chinese President] Xi Jinping and the CPC (Communist Party of China) are investing in what they call the ‘new productive forces’. It’s clear that China is going to control everything from battery technology to automotive software,” Rein says. “With these policies, Trump is essentially shooting American industry in the foot.”

China’s comprehensive approach positions it as a leader not only in EV manufacturing but also in setting global technology standards. Rein cautioned that the US is at risk of falling to the bottom of the ladder in this critical sector.

“The global trend is clear—EVs are the future. By retreating from this race, the US is ceding leadership to China, not just in the auto sector but in the broader battle for technological, economic and climate supremacy,” he concludes.