By Brandon Boyle, Isaac Chan, Daniel Kubis, Erin Sowerby and Kyle Gordon

The policy environment has dramatically shifted in the United States, with the second Trump administration rolling back several incentives and enforcement mechanisms that previously supported battery electric vehicle (BEV) affordability and regulatory pressure on OEMs. Against this backdrop, Roland Berger’s Q3 2025 forecast presents three updated scenarios in which the BEV share of new-vehicle sales in North America through 2030 has dropped against earlier expectations.

However, the future is still electric and Roland Berger expects North American BEV penetration to reach approximately 50% by 2040 as the North American market benefits from the improved technologies and supply chains developed for BEV demand in other regions.

H1 2025 performance

Despite a steady cadence of new launches from US and foreign OEMs, BEV sales rose only 5% year over year in the first half of 2025. A temporary surge before the end of EV tax credits and stable prices lifted sales, but regulatory headwinds and growing hybrid adoption constrained BEV growth to 11% over the same period.

What changed in the policy landscape

Since the inauguration of the second Trump administration, the regulatory backdrop has become increasingly uncertain and fragmented, leading to lower BEV sales. Federal incentives and advanced manufacturing credits that previously supported supply and demand activity have been reduced or cancelled under the One Big Beautiful Bill Act (OBBBA) framework, eroding BEV affordability for consumers and diminishing regulatory pressure on OEMs to accelerate electrification. In parallel, emissions enforcement has softened, with staged rollbacks of tailpipe standards and related mechanisms, while the California Air Resources Board’s (CARB) authority to set its own emissions targets has been repealed.

The net effect will be a near-term bulge in BEV demand before incentives disappear, followed by a pullback of adoption as affordability and regulatory pressure ease. This shift is not unique to the United States; it echoes a broader pattern seen in other markets where policy certainty plays a decisive role in the pace of BEV adoption. For example, BEV sales in Germany surged ahead of the Environmental Bonus incentive’s expiration at the end of 2023, followed by a temporary decline before gradually recovering thereafter.

From policy to consumer drivers: the evolving market dynamic

As regulatory influence wanes, BEV adoption will increasingly be steered by OEM decisions and consumer preferences.

OEMs are expected to refocus portfolios towards higher-margin vehicles amid fewer incentives and tighter BEV pricing flexibility. Lower-volume BEV models are likely to be phased out while HEVs and PHEVs gain traction as a more profitable bridge technology. Major automakers such as Ford, Stellantis, and Toyota have already revised near-term electrification strategies, scaling back BEV targets while emphasizing hybrid growth. In absence of strong regulatory pressures, these portfolio shifts will play a decisive role in shaping BEV model availability and affordability.

Simultaneously, consumer preferences will be increasingly critical. Adoption continues despite growing political polarization and politicization of BEVs across Red, Blue and swing states, signaling broader acceptance. Going forward, regional discrepancies in consumer preferences (i.e., demographics, politics) will lead to structural differences in overall adoption across North America. Ongoing advancements in BEV technology and improvements in supply chain efficiency are expected to further enhance benefits for North American consumers and support increased adoption, even if the near-term momentum is tempered.

Scenarios for BEV adoption in North America

Roland Berger presents three regional-scaled scenarios for North American BEV adoption: Upside Case, Base Case, and Downside Case. Across these scenarios, the trajectory for BEV adoption remains positive in the long term but is markedly lower and more delayed than pre-OBBBA expectations.

Roland Berger Upside case: Regulatory rebound

In the Roland Berger Upside scenario, OEMs continue to offer BEVs in the short term, anticipating ongoing emissions regulation, with regulatory levels returning to those similar to the Biden administration after the next presidential election. BEV adoption follows a consistent growth pattern across both high-regulation (such as CARB states and Canada) and low-regulation states.

Roland Berger Base case: Delayed normalization

In the Roland Berger Base scenario, near-term BEV adoption slows due to laxed emissions regulations and penalties through 2027. OEMs respond by increasing BEV model availability in anticipation of future regulatory measures, though at a slower pace, projected for 2028. It is assumed that consumer challenges regarding BEVs are gradually addressed through ongoing investment and innovation from global markets, which also affects North American consumers.

Roland Berger Downside case: Market-led stall

In the Roland Berger Downside scenario, BEV adoption declines in the near-term as OEMs focus on models with higher profitability. Emissions regulations are not expected to return significantly after Trump’s second mandate, resulting in BEV adoption stalling through 2030, primarily influenced by consumer preferences. Long-term electrification rates vary among US states due to structural differences in customer choices.

Key takeaways

The evolving regulatory landscape and market dynamics present distinct challenges and opportunities for automotive industry stakeholders. Understanding these implications is critical for navigating the near- and long-term electrification trajectory.

For OEMs:

Traditional manufacturers must manage a complex transition to a multi-powertrain strategy, balancing internal combustion engines, hybrids, and battery electric vehicles. While BEV programs remain critical for global competitiveness, the rise of hybrids to meet emissions targets and profitability goals will heighten xEV competition. BEV-only players will have to defend market share against hybrids offering a more compelling price-performance balance amid ongoing profitability pressures.

For suppliers:

Suppliers will encounter a more cautious market environment with lower near-term BEV volume expectations. This will drive a reassessment of electrification investments and make cost reduction, standardization, and automation critical for survival. Some smaller suppliers may exit the market due to scale and profitability challenges, while others will need to adapt by focusing on efficiency and strategic partnerships to remain competitive.

In conclusion, the North American automotive future remains electric, but without renewed regulatory support, that transition will be delayed. In the meantime, growth opportunities will emerge for players capitalizing on the expansion of hybrids and the extended runway of ICE vehicles, while those heavily invested in a BEV-only future will face a more challenging path ahead.