Here's a depressing but all too predictable headline from The Wall Street Journal last week: "Detroit's EV Pullback Is Costing $50 Billion."
Yikes. That's a lot of money for the American auto industry to lose. Once again, we have confirmation of an iron law of economics: If you want to kill an industry, subsidize it.
The best recent example of this rule is the green energy industry (solar and wind power), which has been heavily boosted with taxpayer dollars for almost 50 years now and is still an inconsequential form of overall energy supply. Dozens of promising firms like Solyndra collected billions of taxpayer dollars and were supposed to be the energy companies of the future. Now they lie in rest in the business-bust cemetery.
But perhaps an even bigger waste of money has been the tens of billions of taxpayer dollars that former Presidents Barack Obama and Joe Biden threw at the electric vehicle industry.
I have nothing against EVs. I own a hybrid, which our family likes a lot. Teslas are great cars.
But the Biden administration was so obsessed with ending fossil fuel consumption overnight that they didn't even support hybrids. With the Biden team and the climate-change fanatics, it was total and immediate transition to electric cars. Or bust.
Well, it's been mostly bust. My group Unleash Prosperity warned repeatedly during the Biden years that the auto industry was sowing the seeds of its own destruction by getting hooked on the fool's profits of taxpayer handouts for EVs. These included a $7,500 tax credit to entice people to buy an EV, billions of dollars of manufacturing subsidies, free charging stations, choice parking spaces, and other special treatments.
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The big three auto firms got suckered into just what we counseled against: building cars for the politicians, not the car buyers. The problem has been that the know-it-alls in Washington ignored one key feature of the car-buying public: We Americans have a love affair with our cars. We were never going to allow the politicians to tell us what kind of car to buy and drive.
EVs also became knotted up in partisan politics. They became known as "Biden cars." In this polarized nation, half of Americans hated Biden and his policies. Republican voters weren't going to obey his car-buying commandment.
EV sales were also stalled by countless horror stories of drivers being stranded in the mountains with no juice left in the battery, or cars not starting on frigid winter mornings. This made car buyers wary. Also, there have been legitimate concerns about putting the entire transportation system on the strained electric grid system.
So despite all the federal and state handouts to the industry, EV sales fell by half in 2025 once the tax credit expired last year. Sales have fallen to their lowest level in four years. Over the past six months, Ford, General Motors, and Stellantis all lost money thanks to overinvestment in EVs. The unsold cars are now piling up on the dealer lots. (Now might not be a bad time to buy an EV. The deals are out there.)
Elon Musk may well be right that electric cars will be the vehicles of choice in the future as battery technology continues to improve. Their costs will fall, the batteries will allow motorists to drive farther without recharging, and the reliability will undoubtedly rise.
But for that future to unfold, keep the government as far away from the auto industry as possible. To slightly alter a phrase from Justice John Marshall, the power to tax and the power to subsidize is the power to destroy.
Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.
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