The EV demand slump in the US, triggered by the expiration of federal tax credits, has prompted Dana Inc. to close its Auburn Hills plant in Michigan, resulting in at least 200 layoffs. This reflects broader challenges for automakers facing reduced orders and billions in losses amid shifting policies.
-
Dana Inc. shutters Auburn Hills facility due to lower EV demand post-subsidy expiration.
-
The closure affects around 200 employees under the Worker Adjustment and Retraining Notification Act.
-
EV sales surged 40.7% in Q3 2025 before dropping, with Ford projecting up to $5.5 billion in annual losses.
Discover how the EV demand slump is reshaping US manufacturing after tax credit expiration. Explore impacts on Dana Inc. and automakers—stay informed on industry shifts today.
What is causing the EV demand slump in 2025?
The EV demand slump stems primarily from the expiration of federal tax credits on September 30, 2025, which previously offered up to $7,500 for new electric vehicles and $4,000 for used ones. This policy change under the Trump administration’s Big Beautiful Bill Act has led to a sharp decline in orders, forcing companies like Dana Inc. to close facilities. Automakers are now grappling with high production costs and slower market adoption, exacerbating losses across the sector.
Dana Inc., a key supplier of driveline and electrified propulsion systems, confirmed the closure of its Auburn Hills plant in Michigan earlier this month. The move impacts at least 200 employees, as detailed in a notice under the Worker Adjustment and Retraining Notification Act. While Dana will maintain operations at its driveline manufacturing facility in the state, the Auburn Hills site will cease production, highlighting the immediate repercussions of waning EV enthusiasm.
The end of subsidies has created a ripple effect throughout the supply chain. According to industry reports from the U.S. Department of Energy, EV adoption rates had been accelerating due to these incentives, but their removal has cooled consumer interest. Experts from the Alliance for Automotive Innovation note that without financial perks, the higher upfront costs of EVs deter many potential buyers, leading to inventory buildups and production cuts.
How has the EV subsidy reversal impacted US automakers?
The reversal of EV subsidies has fueled significant financial strain for major US automakers. Ford Motor Co. reported a $1.3 billion loss in its EV division during the second quarter of 2025 and anticipates total annual losses reaching $5.5 billion. General Motors doubled its Q3 EV sales, but this was driven by a pre-expiration rush, with the company now forecasting up to $1.6 billion in Q4 impacts from the incentive cutoff.
Stellantis and other players are similarly affected, citing high raw material costs and supply chain disruptions alongside the demand drop. As per data from Cox Automotive, EV sales grew nearly 30% year-over-year in Q3, but post-subsidy projections show a potential 15-20% decline in Q4. Industry analyst Mary Barnett from BloombergNEF states, “The subsidy expiration removes a critical bridge for consumer adoption, forcing a reevaluation of EV strategies amid profitability challenges.”
This slump signals a broader restructuring in the US EV sector, which once boomed under Biden-era grants and incentives. The Trump administration’s approach aims to reduce federal spending and rebalance the market, but it has instead amplified losses. Automakers like Ford and GM are pivoting toward hybrid models to meet demand, potentially delaying net-zero emission goals set for 2050.
Auto manufacturer Dana Inc. closes Auburn Hills plant, cites “lower demand” for EVs pic.twitter.com/PRIPS2hfJA
— Anas Alhajji (@anasalhajji) October 22, 2025
The Dana closure may be just the start, with analysts predicting more supply chain exits as production targets scale back. EV sales had surged 40.7% in Q3 compared to the prior quarter, fueled by buyers capitalizing on expiring credits. However, this temporary boost masked underlying issues like elevated production expenses and raw material shortages, which continue to hinder profitability.
Is China’s BYD gaining an edge over US EV competitors?
While US firms struggle, China’s BYD is outpacing rivals abroad, particularly in Europe. The company reported an 880% sales surge in the UK last month, selling 11,271 electric vehicles and pushing 2025 totals over 35,000 units, as noted in reports from Cryptopolitan. BYD’s success stems from affordable models like the SEAL U DM-i hybrid and SEALION 7 electric SUV, which appeal to cost-conscious consumers.
In contrast, US manufacturers face intensified competition without subsidy support. Tesla has signaled plans for more budget-friendly options, but matching BYD’s pricing and rapid expansion remains difficult. According to the International Energy Agency, global EV market share for Chinese brands reached 25% in 2025, up from 18% the previous year, underscoring the geopolitical shifts in the sector.
Experts like Dr. Li Wei from the China Automotive Technology and Research Center emphasize, “BYD’s vertically integrated supply chain allows for lower costs, giving it a competitive advantage in subsidy-free markets.” This dynamic pressures US companies to enhance efficiency, though the immediate outlook involves cost-cutting measures and diversified portfolios.
The overall EV demand slump underscores the sector’s vulnerability to policy changes. As automakers navigate this challenging landscape, innovation in battery technology and charging infrastructure will be crucial. Sources such as the Electric Drive Transportation Association highlight that while short-term hurdles persist, long-term environmental commitments could drive renewed investment.
Frequently Asked Questions
What led to Dana Inc.’s decision to close the Auburn Hills plant?
Dana Inc. closed its Auburn Hills plant due to a significant drop in EV demand following the federal tax credit expiration on September 30, 2025. The facility, focused on electrified propulsion systems, saw reduced orders from automakers, leading to layoffs of about 200 employees as per the Worker Adjustment and Retraining Notification Act notice.
How will the EV demand slump affect US auto industry jobs in 2025?
The EV demand slump is likely to impact thousands of jobs across the US auto sector as companies like Dana Inc. scale back production. With automakers reporting billions in losses, further plant adjustments and shifts to hybrids could reshape employment, though retraining programs may mitigate some effects for workers transitioning to other vehicle types.
Key Takeaways
- Subsidy Expiration’s Role: The end of $7,500 tax credits has directly caused the EV demand slump, leading to facility closures like Dana Inc.’s in Michigan.
- Financial Strain on Automakers: Ford faces up to $5.5 billion in 2025 EV losses, while GM anticipates $1.6 billion in Q4 hits, prompting production pivots.
- Global Competition Insights: China’s BYD surges ahead with affordable models, highlighting the need for US firms to innovate and cut costs to regain market share.
Conclusion
The EV demand slump in 2025, exacerbated by the federal tax credit expiration, marks a pivotal moment for the US automotive industry, as seen in Dana Inc.’s Auburn Hills plant closure and widespread layoffs. With major players like Ford and GM incurring substantial losses and China’s BYD dominating abroad, restructuring toward hybrids and efficiency gains is underway. As policies evolve, stakeholders must monitor these shifts closely—investors and consumers alike can prepare by focusing on sustainable, adaptable strategies for the road ahead.