Car Industry Trends and Insights

• CEO Jim Farley says the company is poised to unveil a "breakthrough" EV and U.S.-built platform, calling it a pivotal moment in Ford’s history.

• The strategy aims to leapfrog Chinese EV rivals by focusing on affordability, efficient design, and domestic battery production.

• Ford’s Louisville Assembly Plant and BlueOval Battery Park in Michigan will anchor the automaker’s future in EV manufacturing.

Ford CEO Jim Farley says the company will reveal a new strategy next week that will be a “Model-T moment” for the 120-year-old automaker. Scheduled to be unveiled on August 11 in Kentucky, Ford’s new EV roadmap will be a major shift toward profitability and global competitiveness, with a spotlight on American engineering and production, he said.

Farley revealed that Ford will debut a “new family of vehicles” that he says will offer “incredible technology, efficiency, space and features.” Central to this strategy is the launch of a new EV platform designed and built in the U.S., marking a clear effort to distance Ford from its first-generation EVs and signal a more competitive approach against global, especially Chinese, EV manufacturers.

“This is a Model-T moment for us at Ford,” Farley told investors during the company's earnings call. “A chance to bring a new family of vehicles to the world,” the Detroit News reported. He emphasized that the vehicles would be more than just new designs — they represent a wholesale reinvention of Ford’s EV engineering and manufacturing playbook.

Louisville becomes Ground Zero

The Aug. 11 announcement will take place at Ford’s Louisville Assembly Plant, a site already transitioning toward EV production. The plant, which had been home to the Ford Escape and Lincoln Corsair, was earmarked in Ford’s 2023 UAW contract for a $1.2 billion investment and an “all-new EV product.” Recent filings also show that Ford is retooling the plant to support EV production, including the addition of charging infrastructure.

Its proximity to the BlueOval SK Battery Park in Kentucky and Ford’s lithium iron phosphate (LFP) battery plant in Marshall, Michigan, reinforces the company’s U.S.-centric production model — key to leveraging domestic tax incentives and reducing costs.

Lessons from China

Farley acknowledged that Ford’s chief EV competition isn’t the traditional global automakers but rather Chinese companies like BYD and Geely, which are known for building low-cost, high-quality electric cars. He cited a recent executive trip to China, where Ford’s leadership studied Chinese automakers to learn from their vertically integrated supply chains and cost-efficient platforms.

“Our strategy is very simple,” Farley said. “We believe the only way to really compete effectively with the Chinese… is to radically reengineer and transform our engineering, supply chain and manufacturing process.”

Ford’s refreshed EV approach will focus on a limited number of body styles — known in the industry as “top hats” — on flexible vehicle platforms. The idea is to concentrate resources where Ford can turn a profit. Despite increasing EV sales, the automaker reported a $1.3 billion loss in its Model e division in Q2, up from $1.1 billion a year earlier.

To hedge against EV market fluctuations, Ford will continue offering a range of powertrains, including hybrids and extended-range electric vehicles. “We think that’s a much better move than a $60,000 to $70,000 all-electric crossover,” Farley said.

• Average monthly new vehicle sales jumped to 1.17 million in Q2 2025, driven by pull-ahead purchases
• Vehicle inventory fell below 3 million units as consumers rushed to buy ahead of tariff-related price hikes
• Rising prices and depleted supply could stall automotive momentum in Q3, Cloud Theory warns

Lots of consumers purchased new cars in the second quarter of 2025, just ahead of tariffs that affect nearly all makes and models sold in the U.S. While these savvy consumers avoided paying higher prices, they significantly drew down inventories, so that there are now fewer new cars on dealers’ lots, and those cars are more expensive.

An analysis by automotive data analytics firm Cloud Theory shows the U.S. automotive industry posted a robust second quarter in 2025, buoyed by a surge in new vehicle sales that averaged 1.17 million units per month, up from 1.08 million in Q1.

However, the analysis suggests this second quarter boost may come at a cost, with signs pointing toward a challenging third quarter as inventory tightens and prices edge upward.

The second quarter figures are detailed in Cloud Theory's newly released "On the Horizon" report, which attributes the sales lift to "pull-ahead" demand. This phenomenon, triggered by tariff-related pricing concerns, began in March and continued throughout the quarter, prompting consumers to expedite purchases in anticipation of costlier vehicles.

“The pull-ahead effect of tariff-related pricing increases that began in March extended into Q2, but the aftereffects of those accelerated purchases are looming,” said Rick Wainschel, vice president of Data Science and Analytics at Cloud Theory. “This summer poses significant risks to the industry’s current momentum.”

Inventory levels fall below 3 million units

This fast pace of sales has outstripped replenishment efforts, with inventory dropping steadily over the past two quarters. After averaging 3.27 million units in Q4 2024, the analysis shows inventory fell to 3.07 million in Q1 and 2.84 million in Q2 2025, marking two consecutive quarters where more vehicles left lots than were replaced.

Cloud Theory estimates that 500,000 vehicles sold over the last four months were pull-ahead purchases, significantly impacting current supply levels.

As inventory shrinks, prices are rising. The average new vehicle price climbed from $49,236 in Q1 2025 to $49,713 in Q2, a $477 increase. However, the report notes this modest gain obscures a sharper underlying rise. 

To mitigate sticker shock, manufacturers have shifted production toward lower-priced segments, including midsize and small SUVs, and away from costlier full size trucks and XL SUVs.

This strategic realignment has produced a short-term dip in the Average Marketed Price by $202 in late June. Without the shift in segment mix, prices would have risen by $223, signaling broader inflationary trends.

Consumer incentives 

Additional insights from the Q2 report reveal shifting market dynamics:

• Turn rates—the percentage of inventory sold in a given period—exceeded 40%, up from the low-to-mid 30s in previous quarters.
  

• Days-to-move, a measure of how long vehicles stay on lots, dropped from 80 days in Q1 to 71 days in Q2, reflecting faster sell-through.
  

• Market adjustments, or consumer-visible discounts and incentives, averaged over $2,000 in Q2—up nearly $600 year-over-year.

• U.S. EV buyers face a market dominated by costly SUVs and trucks, with few affordable options under $30,000.

• China churns out low-cost electric cars, some under $10,000, fueling exports to Southeast Asia, Europe, and beyond.

• Regulatory hurdles and consumer preferences keep most of these bargain EVs out of American showrooms—for now.

As electric vehicles gain ground globally, a stark divide is emerging: American roads are filling up with large, expensive electric SUVs and trucks, while China and other overseas markets enjoy a flood of low-cost EVs aimed at budget-conscious drivers.

In the United States, automakers have focused on high-margin models like the Ford F-150 Lightning, Chevrolet Silverado EV, and Tesla’s SUV lineup, often priced well above $40,000. Smaller, inexpensive EVs remain scarce, leaving many American consumers unable to find truly affordable electric alternatives.

Meanwhile, China has become a powerhouse of cheap electric mobility, producing dozens of models that cost less than $15,000—or even under $5,000 in some cases, like the wildly popular Wuling Hongguang Mini EV. These vehicles are increasingly finding buyers outside China, particularly in Southeast Asia, Europe, and Latin America, where city-friendly size and low prices make them attractive.

European streets, for example, now host models like the MG4 and BYD Dolphin, offering affordable electric options far below typical U.S. price points.

Nissan's N7

Nissan has successfully developed and introduced the N7 mid-sized electric sedan. It's selling well in China and Nissan now plans to export it to other global markets, except for the U.S.

Some reviewers have said the N7 resembles a newer Nissan Altima. "It's a clean, if nondescript sedan with headlights clearly inspired by the Ariya," the car site CarBuzz said. 

Despite this growing output inexpensive Chinese EVs abroad, most are unlikely to reach American shores soon, hampered by steep tariffs, safety regulations, and geopolitical tensions.

However, industry watchers say the tide could slowly shift, with companies like GM teasing sub-$35,000 EVs for the U.S. market in coming years. For now, the gap between America’s pricey EV landscape and the bargain-filled markets overseas remains as wide as ever.

• The Manheim Used Vehicle Value Index climbed to 208.5, up 6.3% year over year and 1.6% month over month, reflecting seasonal strength despite tariff-driven volatility.

• Retail demand remains solid as off-lease supply continues to tighten, supporting higher used-vehicle values.

• The used-vehicle market is showing signs of normalization and resilience, outperforming the new-vehicle segment in terms of stability.

The wholesale used-vehicle market posted a notable uptick in June, defying the typical seasonal downtrend and signaling continued strength in a sector buoyed by resilient demand and tightening supply. That suggests prices on used car lots may continue to rise.

According to the latest data from Cox Automotive, the Manheim Used Vehicle Value Index, which tracks vehicle prices at the wholesale level, rose to 208.5,  a 6.3% increase from a year ago and up 1.6% from May after seasonal adjustments.

Tariffs, which are making new cars more expensive, were likely a factor. However, despite the seasonally adjusted index showing a monthly rise, non-adjusted wholesale prices actually fell by 1.1% in June, a sharper-than-usual decline. This disconnect was largely attributed to price volatility following recent tariff announcements that disrupted new-vehicle supply chains and trickled down to affect used-vehicle dynamics.

“Wholesale appreciation trends have been more volatile over Q2 as tariffs really impacted new sales and supply,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “Even so, retail sales continue to run a bit hotter than prior years.”

Signs of market stabilization

Industry experts see encouraging signs that the used market is returning to a more stable rhythm after years of pandemic-induced turbulence. 

“Historically, the used market has been incredibly consistent; but the pandemic disrupted much of that consistency,” said Jonathan Smoke, chief economist at Cox Automotive. “What we are seeing suggests we could finally be out of that pattern.”

Improved supply — bolstered by trade-ins linked to new-vehicle sales earlier this year — is contributing to a more normalized market. This balance between supply and demand is expected to support continued price strength in the second half of 2025.

Elevated depreciation trends

While June saw stronger index readings overall, weekly data from the Manheim Market Report (MMR) indicated elevated depreciation, especially in the latter half of the month. MMR values fell each week, culminating in a 0.6% drop in the final week. 

Over four weeks, three-year-old vehicles depreciated by 1.3%, a much steeper decline than the 0.6% historical average for the same period.

Still, the average daily sales conversion rate rose to 57.8%, up over 1 percentage point from May and well above the three-year June average of 53.1%, signaling continued retail demand.

The luxury vehicle segment once again led price appreciation, climbing 8.8% year over year, followed by SUVs at 6.0%. In contrast, compact cars declined by 0.1% — the only segment to register a drop — while mid-size sedans and trucks posted modest gains of 2.8%.

Retail used-vehicle sales slipped 1.5% from May but remained 2% higher than June 2024. Listing prices edged up 0.3%, and days’ supply remained unchanged month-over-month at 45 days — still slightly tighter than last year’s 46-day supply.

In contrast, new-vehicle sales slumped. June saw a 14.2% drop from May and a 4.2% year-over-year decline, dragged down by cooling demand and tariff pressures. Retail new sales were estimated to be 3.0% lower than a year ago, with the fleet share dipping to 17.6%.