EV pivot by automakers will likely drive 2026 US auto production trends: analysts

Fastmarkets01-12

Key takeaways: US automakers’ EV strategy reset, reduced mandates, and subsidies are boosting ICE and hybrid vehicle production trends Shifts in auto production impact US steel demand, with cold-...

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href=https://www.fastmarkets.com/insights/ev-pivot-by-automakers-will-likely-drive-2026-us-auto-production-trends-analysts/><strong>Fastmarkets</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key takeaways:\n\nUS automakers’ EV strategy reset, reduced mandates, and subsidies are boosting ICE and hybrid vehicle production trends\nShifts in auto production impact US steel demand, with cold-...</p>\n\n<a href=\"https://www.fastmarkets.com/insights/ev-pivot-by-automakers-will-likely-drive-2026-us-auto-production-trends-analysts/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0477156953.USD","symbol_name":"HARRIS ASSOCIATES US VALUE EQUITY \"RE\" (USD) 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PARIBAS US MID CAP \"C\" (USD) INC","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","IE00BQXX3F31.USD":"GUINNESS GLOBAL INNOVATORS \"C\" (USD) ACC","SG9999004303.SGD":"Nikko AM Shenton Global Opportunities SGD","LU0072461881.USD":"BGF US BASIC VALUE \"A2\" ACC","BK4516":"特朗普概念"},"translate_title":"分析师：汽车制造商转向电动汽车可能会推动2026年美国汽车生产趋势","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"F":0.68,"ICE":1},"content_text":"Key takeaways:\n\nUS automakers’ EV strategy reset, reduced mandates, and subsidies are boosting ICE and hybrid vehicle production trends\nShifts in auto production impact US steel demand, with cold-rolled and galvanized steel seeing significant demand increases\nHigh vehicle prices and gradual EV adoption are slowing production growth, with recovery expected by 2028-2029\nFord pivots to hybrids and smaller EVs, aiming for 50% hybrid/EV production by 2030, driven by customer demand\n\nUS automakers’ reset of their strategies for electric vehicles (EVs) is likely to impact overall US automotive production trends in 2026, according to auto and steel sector analysts.\nThe end of EV mandates and subsidies, combined with a reduction in federal average corporate fuel standards, provides a boost for sales of internal combustion engine (ICE) vehicles as consumer preferences guide trends, slowing the adoption rate for EVs and speeding up adoption rates for hybrids, analysts said. \nOverall US-based auto production volumes next year could shift by up to 1% in either direction, analysts told Fastmarkets, reflecting differing assessments of how effective reset strategies are, and how quickly and smoothly automakers can implement those strategies. \nThe resulting shifts in US automotive production will, in turn, drive demand for US-produced steel, especially for cold-rolled and galvanized steel sheet, as well as special bar quality and cold-heading quality steel rods. \nSteel demand impact\nSteel is paramount in automotive production, representing up to 54% of the materials used to make both internal combustion engine (ICE) vehicles, hybrids and EVs, according to the American Iron and Steel Institute (AISI).\n“The big auto exposures are in cold-rolled and galvanized sheet, where the auto sector represents 40% of overall US sheet product [output], and special bar quality steel, where automotive represents 40-50% of the total market,” Phil Gibbs, metals equity analyst at Keybanc Capital Markets, said.\nLooking across all steel products, the automotive sector represents about 20-25% of US steel demand, the analyst estimated.\n“I think there may be a small shift to steel away from aluminium, because electric vehicles are slowing down and there is less pressure to reduce weight for fuel economy,” Arthur Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations, said.\n“The Detroit Three will build more trucks using more steel and aluminium to maintain profits as small cars continue to disappear,” Wheaton said, adding that he expects overall auto production to decline in 2026. \nTariffs and incentives\nA number of other factors may shape production volumes, including the degree to which automakers will continue to offer incentives and rebates, as well as the degree to which they will continue to absorb higher tariff costs, according to Bill Rinna, vice president, Americas at GlobalData Automotive in Farmington, Michigan.“The wild card is [whether] manufacturers can continue to keep prices down through incentives and to keep them somewhat affordable,” Rinna said.\nAffordability is a key headwind for the US automotive market, given the average transaction price is now at $49,814, according to American vehicle valuation and automotive research company Kelley Blue Book’s November report.\nAverage incentives increased by 3.3% in November from October, representing 95.8% of the manufacturer’s suggested retail price, according to Cox Automotive.\nEVs can be more competitive, even in a market without incentives and subsidies, because it costs less to make and operate a battery electric vehicle (BEV) — or even a hybrid — than to operate a gas engine vehicle, according to Felix Bello, Fastmarkets’ senior steel analyst.\n“So [EV makers] might have an opportunity when making the assumption that affordability is a constraint,” Bello said.\nHe pointed out that EV maker Tesla’s high operating margins allow for more room to compete on price to gain market share.\n“[EV maker] Rivian is coming out with a less expensive model R2 that is expected to start at $45,000 and is being touted as the first mass-market, affordable EV, aiming to compete against the Tesla Model Y,” Rinna said.\nAdditionally, demand for new cars is likely to be strengthened by the deductibility of interest rates, up to $10,000 per year, for auto loans to buy new vehicles assembled in the US.\nProduction outlook\nRinna expects overall US light vehicle production volumes to fall by 2.46% to 9.93 million units from 10.18 million units in 2024, and then to rise by 1.11% to 10.04 million units in 2026, based on GlobalData’s December revisions to its forecasts.\nUS auto production is forecast to rise steadily from 2027 to 2030, when it will reach 11.30 million units.\nFor Mexico, GlobalData forecasts production will rise to 4.12 million units in 2026 from 3.92 million units in 2025. Afterward, the data company expects this figure will decline for two years, then rise for two years, reaching 3.78 million units in 2030.\nIn Canada, overall auto production will decline slightly in 2026, to 1.23 million units from 1.24 million units in 2025, but then is expected to rise in 2027 and beyond, reaching 1.46 million units in 2030.\nThere is one caveat on consumer demand in the US next year, according to Gibbs: with dealer inventory likely to rise in 2026 because EV demand has dropped in 2025, it could reduce the volume of auto production needed to match consumer needs.\nGlobalData shared its North American forecast of production by model type for 2025 with Fastmarkets: BEVs at 1.19 million units, plug-in hybrid electric vehicles (PHEVs) at 310,000 units, full hybrid electric vehicles (FHEVs) at 1.87 million units and ICE vehicles at just 11.73 million units. \nThe data company expects the BEV share of North American production to rise from 7.9% in 2025 to 8.9% in 2026, 10.7% in 2027 and 22.7% in 2030.\nSteady state\nAuto analyst Marick Masters, professor of business at Wayne State University in Detroit, told Fastmarkets that US auto production has reached a plateau.\nAs a result of a range of negative factors, “Light vehicle production and sales in the US appears to be at a post-pandemic plateau that is significantly less in volume than the pre-pandemic situation,” Masters said.\n“The US market does not appear likely to break through this more-or-less steady state in 2026,” he added.  \n“The US-based auto producers — union and non-union — will be especially negatively impacted by federal policies on electric vehicle demand and production,” Masters said. “Trump’s elimination of tax subsidies for the purchase of EVs, along with tariffs on auto vehicles, materials and components will contribute to shifting production where possible to ICE [vehicles] and diminishing companies’ EV sales and profits.”\nMasters also cited the “higher cost of labor due to the Big Three contracts with the United Autoworkers and their industry-wide repercussions” as having a negative impact on US auto production. \nFord’s pivot\nAutomaker Ford Motor Company announced on December 15 that it is taking a $19.5 billion charge off for EV investments and new vehicle development to hybrids, but will continue to sell smaller profitable EVs, as well as popular ICE vehicles.\n“This is a customer-driven shift to create a stronger, more resilient and more profitable Ford,” Jim Farley, the automaker’s president and chief executive officer, said.\nFord expects hybrids, extended-range EVs and full electric vehicles combined to represent 50% of its production by 2030, up from 17% in 2025.\n“Everyone knows the Ford F-150 is the best-selling vehicle in our country [and] the hybrid [F-150] is now 30% of our business,” Farley told local media on December 15. \nHybrids are rapidly gaining market share, the CEO said, noting that in November “our sales were flat and our hybrids were up 30%.”\nPace of implementation\nUS light vehicle production volumes should decline by 1% next year, according to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.\n“High automobile prices for US-produced vehicles will continue to be a barrier to efforts to expand production,” the analyst said. \nLess expensive EVs — with more potential to expand EV market share — are hitting the market, but it will take time for them to gain traction, according to Fiorani. \nThe final production volume for 2025 is expected to be 10 million light vehicles, mostly unchanged from 2024, Fiorani said.\n“There are so few entry level models being offered, and manufacturers seek the profitability of $60,000, $70,000 and even $80,000 trucks.”\nThe gradual implementation of the ongoing EV reset will dampen overall auto production in 2026 and 2027, but by 2028 production levels will start to rise as automakers maximize existing automaking capacity, Fiorani said.\n“A lot of the [auto] plants that are underutilized at the moment because of being set up for EVs will see some ICE production moving into them, and by 2027 into 2028 we should see a growth of EVs again, as the market accepts the new pricing point,” Fiorani said\n“The manufacturers will decide whether or not they want to sell particular EVs, and that will come with the balancing of supply and demand in setting the price,” Fiorani explained.\nUS production last peaked at 12 million vehicles in 2016, according to AutoForecast Solutions.\n“We don’t expect to see 12 million again in our forecast window, but 11 million should happen in 2029,” Fiorani said.\nVery small cars\nWhile the Trump Administration has announced an initiative to ease regulations to allow for the manufacture of very small vehicles, such as Kei cars made in Japan, the effort will face a number of obstacles if it is to succeed, Fiorani said. \n“Not only would it take years to get those vehicles produced in North America, especially in the US, but there’s not much incentive for manufacturers to build them,” Fiorani said.\n“The profit margin on cars as small as that… is insignificant compared to the profit margin of a Ford F-150 or a Chevy Silverado, and taking that factory space away from a profitable truck isn’t in the mind of a manufacturer,” the analyst said.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; 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