The already unsteady transition from fossil fuels to electrification is about to get bumpier. Just days after it became clear that Americans would be welcoming a new Republican White House administration, automotive industry analysts at S&P Global Mobility predicted that “the support for a speedy transition to zero-emissions vehicles will be drastically reduced.”

In the third quarter of 2024, automakers sold more than 346,000 battery electric vehicles in the United States, equal to 8.9% of total automobile sales. That’s the highest percentage of market share on record, leading Cox Automotive to forecast that “a 10% share is well within reach.”

Those numbers need context. Even as EV sales rise, they are not keeping up with the lofty expectations that analysts had earlier projected. In August of this year, J.D. Power revised its EV adoption forecast downward from 12% to 9% for 2024, pointing to a rise in plug-in hybrid sales as one reason for the shift. In addition to presenting challenges to OEMs, Tier 1 suppliers are also preparing for a changing future landscape.

Peter Tadros, Bosch North America’s president for powertrain solutions, emphasized the electrification shift in an interview with SAE Media. “Things have changed,” Tadros said. “The most meaningful change is going to be in the prediction we made two years ago of at least 50% BEV by 2030. Whether that is because of the political changes or not can be debated. But at the end of the day, the consumer spoke and decided that battery electric vehicles are not for every use case. There will be a change from today where we’re at about 8-10% of BEV take rate.”

Ramiro Gutierrez, president of ZF North America, suggested a similar outlook. “Even before the new administration takes office, we’ve already seen that the adoption of electric vehicles has been slower than originally anticipated,” Gutierrez told SAE Media.

J.D. Power found that overall interest in BEVs, while still strong, is declining. In May, the automotive data and analytics company reported that 24% of shoppers who responded to a survey said they are “very likely” to consider purchasing an EV. That number is down from 26% the prior year.

The EV sales expansion in the U.S. is expected to shift even further downward in the coming years. “First and foremost, there will be a reduction in our expectations for battery electric vehicle share of U.S. new light-vehicle sales and changes in electrification mix,” S&P analyst Stephanie Brinley said, “At this point, we are not ready to define how large the reduction will be, but we are looking at sharp declines in BEV sales expectations.”

A further reduction in EV production is an eventuality ZF is planning for. “The new administration’s agenda seems to be drawing back some of the regulatory elements of the equation,” Gutierrez said. “I think our expectation is that the already slow adoption is going to be even slower and there’s going to be a set of bridge technologies that are going to stay there longer and are going to be more significant than originally expected.”

Technologies that can bridge the gap between traditional ICE and full EVs include everything from mild hybrids with tiny battery packs to plug-in hybrid powertrains that can travel a typical day’s worth of driving on a single charge. PHEV and extended-range electric powertrains help automakers meet stringent emissions regulations and go a long way toward allaying consumer fears of insufficient EV range.

“Now we can start talking about hybrids and how that could be an acceptable solution to our consumers here in the region,” Tadros said. “Hybrids have about a 12% take rate right now, so higher actually than BEV today. And Bosch, from that standpoint, thinks it is a technology that eases the consumer into the electrification age. So this is really where I see the mix and prediction changing in the near to mid-term.”

Tadros emphasized that emissions regulations aren’t likely to shift as quickly as consumer buying habits. “I think when we’re talking about a shift, you still have to meet regulations, you still have emissions requirements,” he said. “So a hybrid solution – whether it’s a plug-in hybrid or extended-range – could satisfy those regulations that we are still under but get consumer acceptance. And we see that in the behavior of the OEMs. They are switching over their platforms to have more offerings for hybrids.”

ZF’s Gutierrez also sees multiple hybrid paths in the future. “A plug-in hybrid today on the market has a range of, let's say, 50 miles of electric driving. We're going to see that being further optimized. So extending that probably closer to 100 miles.” Range-extended hybrids that use a generator to power a battery pack that’s significantly smaller than what’s required for a BEV are another likely avenue forward, said Guiterrez. “What we're going to see is that electric vehicles that are maybe in the range of 300 miles are going to be extended to deliver 700 miles with the help of that generator.”

Cost will remain a major concern for Americans shopping for a new vehicle in the coming years. Bosch’s Tadros said. “The number one concern from the consumer in many studies is the cost of the vehicle.” Batteries make up the largest percentage of the cost of a BEV, and because hybrid vehicles use smaller battery packs, the potential for cost savings is sizable. “Those technologies need to be affordable. They need to be cost effective to basically bridge the market situation from 100% combustion into 100% electrical,” Guiterrez said.“Lower BEV sales share means that more vehicles will be sold without the necessary premium that BEVs require, based on cost to produce and battery cost,” S&P wrote in its post-election forecast. “Though the new forecast will likely see higher penetration of hybrid and PHEV solutions – and possibly a higher mix of extended-range electric vehicle solutions – these are expected to be less costly vehicles than BEVs and lead to improvements in vehicle affordability.”

The slow burn of EV adoption means that not all suppliers have been caught completely off guard. “From a Bosch powertrain perspective, our strategy has not changed,” Tadros said. “We are technology neutral. Our job is to really work with our customers and understand what the consumer wants and offer these solutions regardless of the technology, whether it's an ICE, whether it's plug-in hybrid, whether it's mild, strong, whatever type of hybrid.”

Still, a major shift in the powertrain sales mix isn’t without its challenges. “Obviously, the change from combustion engines into electrified powertrains is very expensive, right? You need to deploy a very significant amount of capital,” Guitterez said. “We've been doing that in our facility in North America, in Gray Court, South Carolina, which we installed 12 years ago. Over time, we've been supplying transmissions for our customers for combustion engines. In the last two or three years, we have started to invest new capital to be able to produce electrical motors that have been following demand from our customers.”

ZF currently builds an 8-speed PHEV automatic transmission used in products like the Jeep Wrangler 4xe. The latest version of the 8HP has almost double the torque output of the electric motors integrated into the transmission as the previous unit. ZF further claims a PHEV using the fourth-generation 8HP could produce 70% less carbon dioxide than a version using a conventional internal combustion powertrain. This unit is scheduled to go into production at ZF’s Gray Court facility in 2025.

With the slower adoption, what we're going to see is that basically the return on our capital is going to come way later. So it's a financial drag,” Guitterez said. “If there are fewer electrical vehicles, at least you have the flexibility with the capacity that you have installing combustion engine products to be able to deliver to that demand and get, let's say, extra life on that capital that was already deployed. We have the flexibility in our South Carolina plant to basically deliver ICE vehicles, plug-in hybrid vehicles, and electric vehicles.”

S&P anticipates “under President-elect Trump, the support for a speedy transition to zero-emissions vehicles will be drastically reduced,” but adds that “continued support for U.S. manufacturing may be a driver to protect some of that incentive.”

While Bosch and ZF see a clear path forward in their ability to adapt to changing market positions, some suppliers will face larger hurdles as they switch gears from a heavy focus on electrification to a more diverse set of powertrain technologies.

“There are going to be companies that are not that flexible or they don't have the full range of products that have deployed a lot of capital for electric vehicles.” Guitterez said. “And those companies are going to be in real trouble because you have a lot of money invested, volumes are not going to be in place. You don't have a substitute product, and then you're going to struggle with paying that capital to the banks at a very high interest rate.”