Why 2025 May Be A Really Bad Year To Buy Or Sell Cars: The End Of Most Automotive Companies Is Approaching

The move from gas cars to elective vehicles has become rather painful recently. This is mainly because governments pushed the automotive OEMs into EVs before the EV ecosystem was ready. Instead of initially targeting EVs at those purchasers who would most benefit from them (people who could almost always charge at home), they pushed them to everyone, and most people initially found EVs wanting.

We were decades behind where we should have been in battery technology; the existing eco-system was based on gas, as were most of the cars sold, so the cars were a mashup of gas and EV technology, resulting in more complexity and problems than otherwise would have been the case. Even though Tesla was impressively successful, much like what happened with the iPhone and the existing cell phone companies it eventually replaced, those car companies didn’t want to do what Tesla did, so most performed poorly.

China learned the Tesla lesson, emulated it at scale across various car companies, and wrapped it with massive government support. The result was a Chinese automotive revolution reminiscent of what Japan did in the 1970s when they almost took over the entire automotive market. But China is moving far faster than Japan, and China has also taken control of many critical resources like rare earth minerals used in EVs, going far beyond what Japan had done. This move has even put Japanese car companies at risk of failure, and they are merging to counter.

Chinese EVs would be the safest choice if not for sanctions, tariffs, and outright banning of these cars in other countries. Car companies on the brink of failure include Jaguar, Mazda, Chrysler, Cadillac, McLaren, Mitsubishi, Volvo, Polestar, Buick, Lucid, Lotus, Canoo (just shut down), Toyota, Nikola (the truck company whose CEO was jailed), Aptera, Infiniti, Nissan, Ford, Fisker (already shut down), and Rivian. This list isn’t inclusive because VW and Stellantis are also doing poorly.  

The Causes Of The Impending Collapse

Car companies could probably survive several things, but together, they are creating a near-inevitably failure in the Western automotive industry. The first I’ve already mentioned was a premature move to EVs and uncertain or eliminated support from critical governments against a massive effort by China to own the auto market. Government bungling coupled with strong Chinese execution alone would be problematic, but there are other issues.

High costs for materials resulted in unusually high prices, high inflation, and high interest rates, making cars relatively unaffordable. The generational move away from car ownership has reduced demand for EVs and the collapsing demand for self-driving cars.

People don’t know whether to buy an ICE (internal combustion engine) car or an EV; they can’t afford the payments resulting from massive price increases and significantly higher interest rates, and Generation X and younger people are increasingly choosing not to own a car which will an even more significant trend once Autonomous Taxis hit critical mass. By the time the existing car companies likely get their collective acts together, the overall market for cars will have collapsed into future Uber.

Gas Or EV: Both Car Types Are At Risk

Gas cars are at risk of being made obsolescent by EVs. Still, EVs are just short of significant advancements in battery technology and motors, not to mention Level 3-4 Autonomous driving features. Depreciation for EVs is scary, and ICE cars aren’t much better. This suggests that if you buy a car, used cars are likely to remain the best deal even though they are the most likely to become obsolete.

A used car in good shape is arguably the best path right now, particularly if you are considering an EV. EVs are starting to hold up better than gas cars, suggesting that an EV might be the safer choice if you plan to hold the car for a long time or until the automotive market settles again. We know that current-generation batteries can last over 100K miles if adequately cared for. But this choice is still best for people who don’t take long car trips and can mostly charge at night in their garage.

Wrapping Up: When To Buy Your Next Car

If you need to buy a different car, I’d suggest buying a used one this time and buying an EV if you fit the ideal EV profile (can mostly charge at home) or an ICE car with a high-reliability rating. Living off Uber is a safer short-term choice because you can more easily pivot if you don’t have an existing car to sell and pay as you go.

I’m expecting the car market to again stabilize between 2027 and 2030. Still, if you aren’t in a rush to purchase, you’ll be in good shape with this strategy when the market is far less risky now. We should, by then, have a critical mass of self-driving taxis to consider (you’ll likely buy a car service once that technology matures if you decide car ownership is no longer for you). 

If you still decide you need to buy a new plan on keeping the car for at least 5 years, in the first two years, the car will massively depreciate, but it should stabilize after that, so at 5 years of use, the average yearly depreciation is more livable. And, as always, the longer you can keep the car (assuming it remains reliable), the less of an annual average depreciation amount you’ll incur (after two years, the depreciation rate on most cars slows sharply).

If you want to see the EV market in 2027, look to China’s car brands. They are effectively two years ahead of the rest of the world and still accelerating. China has demonstrated impressively how to pivot a market. Let’s hope the other countries get a clue before China is the only country left standing after the expected coming bloodbath.

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery development. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.