Slowing EV demand and uncertainty over US tariffs and tax credits may lead Subaru to focus on hybrids
May 18, 2025 at 13:40
- Subaru says it’s “re-evaluating” its electrification strategy, including the roll-out of new EVs.
- The admission comes amid a lack of long-term clarity over US tariffs and EV tax credits.
- Its planned EV-only plant may now also have to build hybrids and combustion vehicles.
Subaru was slow out of the blocks when it came to adding EVs to its lineup, but now it’s wondering whether to even bother trying to catch up to rivals. The automaker revealed this week it was “re-evaluating” its electrification strategy amid a turbulent and uncertain time for the auto industry.
Also: Subaru Trailseeker Is Faster Than A WRX But No One Knows If It’s A Wagon Or SUV
Look at Subaru’s US website and you’ll find just one EV: the recently facelifted Solterra. A second, the Outback-sized Trailseeker that made its debut at last month’s New York Auto Show, is scheduled to be added to the range for 2026. But we’re unlikely to see many more EVs join it any time soon.
Tariffs and Tax Credits: The Great Unknowns
Aside from a general concern about a slowdown in the rate of EV takeup, Subaru, like every other automaker, is hamstrung by a lack of clarity from the US regarding its long term position on both import tariffs and EV tax credits. Nobody knows what the tariff situation will look like six or 12 months from now or whether tax credits will be scrapped or not.
Subaru estimates Trump’s tariffs could cost it $2.5 billion this year because, although the company does have a plant in Indiana, it only builds around half of the 700,000+ cars the brand sells in the US each year, Auto News reports. The remainder have to be imported, and while Subaru could theoretically push the US plant’s current 345,000-unit annual capacity to 500,000, its supplier base can’t handle more than 370,000 units without a major upgrade.
Overseas Production and Shifting Plans
That means the Trailseeker will probably have to be built overseas, Auto News suggesting production will take place north of Tokyo. Subaru also had planned to create a new EV-only plant, but is rethinking that strategy, too. It now says it might have to add combustion vehicles into the mix at the new site.
Subaru execs made the admissions while announcing the company’s fiscal year financial results that revealed operating profit had dipped 13 percent to $2.7 billion. Global sales dropped 4.1 percent to 936,000 vehicles and North American deliveries slid 4.1 percent to 732,000 vehicles, though sales in Japan did climb 5.4 percent to 104,000.
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