Major Automotive Global Trends - June 2025

Global

China renews export of vital and rare minerals for the auto industry, but places significant terms on customers

In recent months, global tensions peaked over China's decision to ban the export of rare earth minerals, of which China is one of the world's most exclusive suppliers. These are raw materials that are essential for the arms, aerospace, electronics, and even automotive industries, and in June, major automakers hinted that if the export embargo continues, in the near future, we can expect significant disruptions in the supply chain and delays in production (especially of EVs).

It is worth noting that in mid-April, China halted its exports of rare earth minerals to the West in response to the trade war and sanctions on Chinese exports initiated by US President Donald Trump. However, the Chinese government has now resumed supplies, accompanied by stricter conditions for customers.

In the automotive industry, disruptions in rare earth material shipments mainly affect the production of permanent magnet electric motors, also known as "Permanent Magnet Synchronous Motors" (PMM). Due to their high power density, such motors are a preferred choice for relatively expensive EVs.

Popular and inexpensive electric models with less sophisticated motors are less directly affected by the magnet shortage. However, the automotive industry is generally affected indirectly, since permanent magnet electric motors are often used in electromechanical power steering systems and sometimes in lasers, headlights, spark plugs, and chips.

As mentioned, the resumption of exports from China now comes with difficult conditions; for example, buyers are not allowed to sell the rare earth minerals originating in China to the US, either as raw materials or as components in finished products. This is a difficult restriction for car and auto parts manufacturers who export cars to the US. In addition, the current shortage is leading to a 40% to 50% increase in the price of these minerals compared to their price a few months ago.

China can afford to dictate terms and prices to customers around the world because it has a global monopoly on the supply of almost 17 rare earth minerals. The country also controls 87% of the world's processing capacity for these raw materials and 91% of their global refining capacity. China's dominance is even greater in magnets based on "Heavy" rare earth minerals.

On the other hand, analysts point out that the export of these raw materials is a significant source of income for China, so it can be assumed that the government will continue to release exports, at least to customers not related to the American defense industries.

USA

The American Senate paves the way for the cancellation of tax benefits for EVs

In June, the US Senate approved a Republican proposal to repeal the EV tax credit, which was previously approved by Congress. The measure is expected to cut the tax credit of up to $7,500 per vehicle that was previously available to buyers of new or used EVs in the US.

However, the version approved by the Senate differs in several key respects from the bill approved by the House of Representatives in May, particularly regarding the expiration date of the benefits, consumer rights, and various exemptions.

The measure is part of a comprehensive tax bill promoted by the Republican majority under the Trump administration. Under the bill, the tax credit is expected to expire 180 days after the new legislation takes effect. That is, the expiration date of the subsidy depends on when the bill is voted on and whether the proposal is passed.

This differs from the timeframe of the House of Representatives, which voted to phase out the subsidy for new EVs by the end of 2026. Vehicles from automakers that have already sold more than 200,000 EVs to date will no longer be eligible for subsidies by the end of 2025. This means that anyone who still wants to benefit from the subsidy in the US must act quickly. In the US, it is estimated that the end of the tax benefit could deter many customers from purchasing EVs, partly due to their high prices.

Another significant difference in the wording received by the Senate is the immediate closure of the “Leasing loophole,” which allowed automakers to receive a tax credit for EV models manufactured abroad, provided that they are leased. This option will be eliminated immediately upon the law’s entry into force. The Senate also rejected a congressional bill that would impose a special annual fee of $250 on EV owners for “Road maintenance.”

However, as an alternative to direct subsidies, the Senate bill promotes indirect incentives. These would allow certain groups of buyers to deduct interest payments on car loans of up to $57,000 from their taxes. Theoretically, this proposal could provide greater tax relief than the current credit. However, it does not affect the immediate purchase price but is spread over several years, which is not attractive to many buyers.

Industry experts warn that eliminating the tax credit for EVs could also harm American manufacturers such as Tesla and Ford, which are focused on EV production, and will face a decline in demand in the short term. At the same time, the reform could pose an obstacle to smaller manufacturers or new players, especially given that the market is already under pressure due to rising interest rates and supply chain problems.

Trump puts the brakes on California environmental auto legislation, but the decision goes to court

In June, the Trump administration signed several resolutions that were approved by Congress and became law. Among them is a resolution that denies California the authority to ban the sale of new internal combustion engine (ICE) vehicles after 2035. California and ten other states have already filed lawsuits against the resolutions.

At the same time, the administration also blocked the state of California's decision to limit emissions from private cars, commercial vehicles, and trucks in its territory. Trump called California's environmental vehicle regulations "A disaster for the country" and said, "We are officially saving the American auto industry by ending California's EV mandate, once and for all."

It should be recalled that already in 2020, the governor of California issued an order stating that only non-polluting emissions cars would be allowed to be sold in the state from 2035 onwards. In 2022, the order was backed by the California Air Resources Board (CARB) with some relief, according to which automakers will no longer be allowed to sell "Net" ICE vehicles starting in 2035, but will still be allowed to sell plug-in hybrid vehicles (PHEVs). This is provided that they offer an electric range of at least 80 kilometers in real-world driving conditions and that their sales do not exceed 20% of each manufacturer's total annual sales. The remaining 80% must be fully electric or fuel cell vehicles.

The regulation, later adopted by eleven other US states, including New York, Massachusetts, and Oregon, is based on an exemption that the US Environmental Protection Agency (EPA) gave various states to ban the sale of ICE vehicles in their territories. This exemption has now been revoked, and California and other states are no longer allowed to enact their own vehicle emissions regulations.

However, doubts were raised as early as March about the legality of the EPA's waiver revocation process, and 11 states filed a lawsuit against the administration, claiming that "The federal government has engaged in an illegal maneuver to prevent legitimate environmental laws."

According to the California governor, "Trump continues his all-out attack on California, and this time he is harming our clean air and America's competitiveness in the world. We are fighting back". It should be noted that the conflict between the state of California and the federal government escalated significantly in June due to the riots that occurred in Los Angeles following the Trump administration's immigration laws and following the president's order to deploy 2,000 National Guard troops to the city against the governor's wishes.

In addition, the governor also signed an order that, according to him, "Will continue to put California on the right track in parallel with the global transition to cleaner cars". The order reaffirms the state’s commitment to zero-emission vehicles (ZEV), promotes clean vehicles through incentive programs, and shifts the state’s vehicle procurement mix toward “Green” vehicles.

Trump’s tough stance on California’s emissions regulations has been backed by the U.S. auto industry’s main lobby, which declared that “California’s regulations were unrealistic”.

New research: Trump administration tariffs caused an increase of almost $2,000 in new car prices in the US. At the same time, EV sales are expected to steeply decline

The tariffs imposed by the Trump administration on foreign vehicles imported into the US have increased the average price of a new vehicle in the American auto market by about $2,000, according to a report by consulting firm AlixPartners, published in June.

The company estimates that automakers are currently passing on about 80% of the costs of tariffs to consumers and warns that the removal of government support for EVs in the US could push American automakers to a marginal position in the global EV market.

According to the report, the increase in vehicle prices, stemming from the tariffs, is expected to reduce car sales in the US by approximately one million vehicles over the next three years. However, the company expects that as the impact of the tariffs fades, car sales will continue to grow and stabilize at about 17 million units by the end of the decade, about one million more than last year's sales.

However, AlixPartners believes that negotiations between the US government and foreign governments on trade agreements could reduce tariffs on imported vehicles from around 25% today to just 7.5% on finished vehicles and around 5% on auto parts.

The consulting firm has cut its forecast for EV sales in the US by almost half and now expects that by 2030, battery electric vehicles (BEVs) will account for just 17% of all new car sales in the US, compared to its previous forecast of 31%.

According to the latest forecast, “Traditional” ICE vehicles will account for half of sales, up from the previous forecast of about a third of sales; traditional hybrid vehicles will account for about 27% of sales, up from the previous forecast of 24%; and plug-in hybrid vehicles will account for only 6% of sales, lower than the previous forecast, which was 10%.

The report estimates that the competitiveness of American automakers will weaken, and they may even have to rely on China as a source of supply for vehicle platforms or establish joint ventures.

Consumer survey: 52% of American consumers are considering advancing the purchase of a new car because of the tariffs

A survey of 1,000 new car buyers in the US conducted by the automotive consumer website Cars.com and published in June, reveals that 52% of new car buyers in the US plan to buy a car early to avoid price increases, which are expected due to the import tariffs on vehicles imposed by the Trump administration.

Another 7% of consumers said they are considering accelerating their car purchases but are "Not in a hurry to act". In comparison, 19% said they decided to postpone the purchase of a car, "To examine the impact of the tariffs on car prices". Only 22% of respondents said the tariffs had no impact on their car-buying decisions.

The survey was conducted in June as part of Cars.com’s annual Made in America Index, which ranks vehicles based on their overall contribution to the U.S. economy. Researchers say the “Consumer rush” to buy more vehicles could explain why the average inventory of vehicles at U.S. dealerships fell in May 2025 for the first time since the chip shortage crisis, and why average vehicle prices are rising.

The survey results come as automakers, auto parts suppliers, and consumers struggle to adjust to the impact of tariffs on the auto industry. The researchers say that while creating incentives to expand US vehicle production is a welcome step, US automakers need to allocate massive resources to building new plants, hiring new workers, and reorganizing their supply chains. All of this significantly increases costs for manufacturers, and those costs will be passed on to consumers.

The survey revealed that approximately 51% of respondents expressed a preference for purchasing vehicles manufactured in the US. 12% clearly stated that they are not willing to buy vehicles made in the US, and 30% claim that the place of production does not affect their decision-making. At the same time, 55% of respondents said they are willing to pay a higher price for the vehicle if this move ensures the creation of jobs in the US.

The average price of a US-made vehicle was about $53,290 at the beginning of June, $2,000 higher than the average price of vehicles made outside the US. The researchers estimate that the price increases due to tariffs may have a negative impact, especially on the purchase of relatively inexpensive vehicles. Of the 18 models currently sold in the US, priced under $30,000, only two are made in the US.

The rest come from Mexico, and they too face potential price increases or production cuts, reducing options for price-sensitive consumers and putting greater financial pressure on many customers.

Britain and the US announced a trade agreement that includes car import quotas

On June 16, after intensive negotiations, US President Trump signed an agreement to reduce tariffs on certain products imported from the UK to the US. The two countries have agreed to continue negotiations to reach a formal trade agreement.

The deal, announced by Trump and the British Prime Minister during the G7 summit in Canada, confirms import quotas and reduced tariffs on vehicles imported from the United Kingdom. Still, import tariffs on British steel and aluminum remain unchanged. At the signing ceremony, Trump praised the excellent relationship between the US and Britain.

According to a presidential order published by the White House, the US plans to impose quotas to limit imports of British-made steel and aluminum, as well as products containing these materials. Licensed imported products will be exempt from a 25% tariff, provided that the United Kingdom presents its supply chain and proves that the raw materials and products were indeed produced independently in the United Kingdom. The White House said that the specific quota level will be determined by the US Secretary of Commerce.

As part of the agreement, British carmakers will be able to export up to 100,000 vehicles to the US a year at a tariff of just 10%, compared to a 25% tariff on cars from other countries. The White House said the plan would take effect seven days after it was published in the official records.

Britain is the first country to reach a deal to cut taxes with the Trump administration, and in exchange for reducing import tariffs on British cars, aluminum, and steel, it agreed to reduce British import tariffs on US-made beef and ethanol. However, agreement has not yet been reached on several key trade issues, and if the two sides fail to reach a final tariff agreement before July 9, they could face tariff increases.

Europe

Social organizations call on the EU to limit the hood height and width of future car models

On June 12, more than 30 European civil society organizations published a joint letter calling on the European Commission to initiate legislation aimed at limiting the dimensions of new vehicles by 2035. This primarily refers to the height and width of the hood of vehicles.

The letter urges lawmakers to draft and publish a legislative proposal by July 2027 and, according to its drafters, "Without EU intervention, the trend of accelerated growth in the dimensions of new vehicles will continue... This has significant negative effects on public health and safety, increased consumption of raw materials, waste of energy resources, air pollution, and increased road congestion."

The letter cites a study by the environmental lobby T&E, which has called on the EU to limit the physical dimensions of vehicles as part of the revision of the European standardization process, scheduled to begin in September 2026 and conclude in September 2027.

The study itself showed that the average height of the hood of new car models has climbed in recent years at an average rate of about half a centimeter per year, and in 2024 it reached 83.8 cm compared to about 76.9 cm in 2010. The increase is partly due to the market's accelerated transition to large off-road vehicles.

According to European safety studies, the higher the hood, the more serious the injury to pedestrians in the event of an accident. Additionally, a high hood restricts drivers' visibility forward and their ability to distinguish pedestrians, especially children. According to the study, every 10-centimeter increase in hood height increases the risk of pedestrian death in an accident by about 27%.

The study authors recommend that the EU limit the height of the hood of new vehicles to a maximum of 85 centimeters by 2025. Additionally, limiting the width will help reduce traffic congestion in cities, particularly in parking areas and on narrow streets.

European EV charging cost report 2024: Germany is the most expensive, Turkey the cheapest

New market research, published in Europe in June, has shown that there are significant differences in the cost of charging EVs between countries in the EU.

The Switcher.ie study analyzed data from the 25 best-selling EV models in Europe, according to the EU’s statistics office. The findings showed that the average cost of fully charging an EV at home in the EU in 2024 was €13.83, representing a slight 0.5% year-on-year increase; the average cost of charging per 100 kilometers was €3.79. Despite the higher prices, the study found that the energy cost of operating an EV is still around 70% lower than that of a petrol-powered vehicle.

The average cost of charging an EV at home in Germany in the same year was €25.73 and €7.06 per 100 kilometers. This data ranks Germany as the most expensive country in Europe to charge an EV and provides another explanation for the sharp decline of around 27% in EV deliveries in Germany that year.

Denmark is in second place in the ranking with an average cost of 24.56 euros for home charging and 6.74 euros per 100 kilometers. Ireland ranks third with a home charging fee of 24.14 euros and a charging cost of 6.62 euros per 100 kilometers.

The study shows that the lowest charging costs are mainly concentrated in countries in Central and Southeastern Europe. The penetration rate of EVs in these regions is relatively low, primarily because the purchase cost of an EV remains high compared to the local average wage level.

In 2024, Turkey was the European country with the lowest charging cost, with a full home charging of EVs costing an average of only 4.05 euros; Georgia came in second from the bottom with a cost of €4.59, followed by Kosovo (€4.87). The study also showed that the average charging cost in Europe was 4% of residents’ net weekly income.

In the first four months of 2025, European EV sales reached 759,415 units, up 28% year-on-year; Italy (+79%), Germany (+42%), and Belgium (+31%) stood out with impressive sales increases.

China

Research: The market share of foreign auto manufacturers in China is expected to continue shrinking

The competitive conditions that foreign automakers face in China are complex. They are expected to become more challenging in the future, according to a study by consulting firm AlixPartners, published in June.

The company estimates that by 2030, the share of local brands in the Chinese market will climb to 76%, while the share of Japanese, European, and American automakers will gradually decrease.

The study estimates that despite ongoing competitive pressure, the price war in the Chinese auto market will not only persist but also gain momentum and develop in new directions. The researchers estimate that automakers will gradually cease to adopt a strategy of open price war in China, as has been the case to date, but will adopt "Indirect" measures such as providing insurance subsidies, interest-free loans, and equipping models with advanced and expensive driver assistance systems at no additional cost.

China's auto industry, which previously relied on joint ventures with foreign manufacturers, has undergone rapid transformation thanks to government policies supporting the independent development of EVs. With the rise of domestic brands, the position of foreign automakers in the Chinese market has been severely affected, and they are experiencing a significant decline in their market share across all segments.

According to the report, while foreign manufacturers are being squeezed out of the domestic market, Chinese automakers are continuing to rapidly expand to the West due to slowing domestic car sales and overcapacity. The researchers note that Chinese manufacturers have made global expansion their primary strategy in recent years, and by 2030, Chinese car brands are expected to hold a share of approximately 10% of all car sales in the European market.

The AlixPartners report also predicts that by 2030, the share of fully electric vehicles (BEVs) in the Chinese market will reach about 50%, while the share of gasoline-powered vehicles will drop from about 50% today to about 19%.

China halts the scrapping program to encourage EVs in several major cities

The Chinese government has temporarily suspended a scrappage program for polluting vehicles that are being replaced by EVs. The program was suspended in six provinces, among other reasons, due to a lack of funding and the authorities’ attempt to curb the phenomenon of used car sales with “Zero kilometers”.

The subsidy currently stands at an amount equivalent to about 2,650 euros per vehicle, and the government expanded the range of vehicles eligible for scrapping in early 2025. The subsidy was originally planned to last until the end of 2026, but due to the lack of response, the budget ended earlier than expected.

In China, it is noted that car dealerships have allegedly abused the program by buying new cars, receiving subsidies for them, and then selling them as used cars with “Zero kilometers”. According to the report, regulators are looking at ways to prevent such “Exercises” and ensure an orderly budget allocation before additional budget is allocated for scrapping and subsidizing vehicles.

At a meeting in Beijing between relevant authorities and executives of major electric vehicle manufacturers, executives were asked to “Exercise restraint” when it comes to igniting a price war in the market. Officials made it clear that manufacturers are not allowed to offer “Unreasonable” price discounts or even sell cars below their real price. They also warned against the practice of selling “Zero-mile” vehicles. No binding regulations have yet been set on the subject. Still, the suspension of subsidies in large parts of China suggests that the government is prepared to intervene directly if necessary.

China introduced the national scrappage program in April 2024, which was originally scheduled to end on January 10, 2025. However, earlier this year, China’s National Development and Reform Commission (NDRC) issued a document stating that the incentive would be provided throughout 2025 for consumers who scrap their old cars and buy new electric vehicles.

According to NDRC data, more than 6.5 million applications for scrapping subsidies have been submitted since 2024. As of May 2025, approximately 4.12 million applications have been received. According to data from the China Private Automobile Association, about 70% of all vehicles purchased in May this year were accompanied by a subsidy application.

India

The Indian government offers new tax benefits for EV manufacturers that will set up factories in the country

The Indian government has announced an incentive program that will grant carmakers duty reductions on a limited number of EVs they export to India, provided they also set up manufacturing operations in the country. Mercedes, VW, Hyundai, and Kia have reportedly expressed interest in the deal.

Last year, the Indian government pledged to transform the country into a global EV manufacturing hub, and it is now also funding this initiative. Under the program, foreign EV manufacturers that set up a factory in the country within three years with an investment of at least €430 million will be able to import up to 8,000 EVs into India per year, at a reduced duty of just 15 percent instead of the current 70 percent. The government has even issued a “Call for applications” to join the scheme.

In India, it is reported that Tesla, which "Inspired" the Indian government to adopt this policy and even negotiated with it on the subject, decided not to accept the offer. Over the last decade, numerous rumors have circulated about the establishment of a Tesla factory in India. Still, in the meantime, it has been clarified that the company is only interested in exporting finished EVs to the country.

India is the third-largest automobile market in the world, although the penetration rate of private EVs there was only about 2.5% of total sales in 2024. However, the trend is on the rise.

Japan

Despite Trump’s import tariffs, the total car export of six Japanese auto makers grew in May by 3%

When the Trump administration announced its decision to impose tariffs on vehicles and parts imported into the US, the Japanese auto industry reacted with panic. However, May data shows that despite the heavy tariffs on Japanese-made vehicles imported into the US, Japan’s auto exports remained strong.

Overall, the total export volume of the six largest Japanese automakers that export to the US reached 274,806 vehicles in May, a 3% increase year-over-year; their cumulative production volume for the first five months of the year also grew by approximately 3% to around 1.5 million vehicles. Exports to North America remained strong, in part because American consumers brought forward purchases before automakers raised prices to offset the cost of the tariffs.

In light of the failure of negotiations on a new trade agreement between Japan and the US, the strong performance in May was a ray of hope for Japanese manufacturers, whose exports grew significantly compared to May last year.

Despite the occasional jump in exports, the global production volume of the six leading Japanese automakers is on a downward trend. In May of this year, their total global production decreased by 3.5% compared to May last year, to 1.67 million vehicles, with the majority of the decline occurring at plants outside Japan.

The Japanese auto industry is still struggling to decide how to respond to the Trump administration's tariffs. In their latest financial reports, published in May this year, manufacturers warned that their profits in the coming year will be hit by at least $11 billion due to the impact of the tariffs.

Japan's automotive industry is the backbone of the Japanese economy, employing approximately 5.5 million people in the country. Automobile exports account for approximately 30% of Japan's total exports to the US, and Japanese automakers have invested a total of around $664 billion in their US operations to date.

Official trade data released on June 18 showed that the value of cars exported from Japan to the US fell 24.7% in May, likely because Japanese automakers cut prices ahead of Trump’s tariffs to absorb the cost of tariffs themselves rather than pass them on to consumers.

Israel

Ministry of Energy policy document on critical minerals: looking into the possibility of establishing industries that will produce EV products

The Ministry of Energy is exploring ways to improve the availability and reserves of critical minerals, including lithium for car batteries, according to a policy document published by the ministry under the title "Formulating a Critical Minerals Policy in Israel for a Zero Emissions Future."

Among other things, the possibility of encouraging the establishment of car battery factories in Israel has also been explored, but there is currently no decision to support it. It should be noted that Europe, China, and the US are currently promoting a strategy that would ensure access to such minerals without dependence on external factors.

In the introduction to the document, the ministry's researchers write: "The events of recent years have exposed the vulnerability of global energy markets to global disruptions, with many countries having to deal with supply shortages, dramatic price increases, and economic uncertainty. In Israel, the risks are even higher, both due to security threats and because Israel has no energy resources. In addition to the issue of global supply disruptions, the world's energy markets are undergoing a transformation into more decentralized, diverse, and independent economies. These changes stem both from the need to strengthen energy security and from global trends to reduce and eliminate emissions, which are shifting from fossil fuels to clean, renewable energy. In Israel, these changes are reflected mainly in the increased use of solar and storage systems.

This change also affects the minerals that will be required to establish the various systems of future energy markets, which will increasingly use distributed and clean technologies. Such as solar systems, wind turbines, electric vehicles, energy storage systems, hydrogen production and use systems, and more... The main minerals that will be required for the future energy economy are many and different in nature, such as lithium, nickel, cobalt, graphite, and rare ores such as platinum, iridium, and more. The increase in demand for these minerals is already evident today...."

The document notes that although Israel has almost no deposits of minerals that will be required for the future energy economy, lithium is also dissolved in the Dead Sea, along with other minerals, and a new technology for its production is currently being tested.

Regarding the establishment of recycling and manufacturing industries in Israel, which will ensure the self-supply of products that support, among other things, EVs, the document states that "Production lines can be established in Israel, thereby ensuring the supply of products to Israel. This is a relevant solution for only a few products, such as solar panels and storage batteries, for which high demand is expected in Israel and do not require an extensive industrial ecosystem, but is not reasonable for more complex products, such as EVs, which require a wide range of specialties and an industrial ecosystem with multiple players and supporting technologies."

However, the ministry indicates that recycling electronic waste is possible for the purpose of producing critical minerals for the automotive industry.