At the start of 2025, the US government made a surprising announcement: the suspension of all plans related to the National Electric Vehicle Infrastructure (“NEVI”). This decision marks a major policy reversal, one that will undoubtedly impact the future of electric vehicle (“EV”) adoption in the country. NEVI, launched in 2021 under the previous US administration, was originally designed to accelerate the deployment of EV charging stations nationwide, with USD 5 billion allocated in federal grants. However, the results have stalled short of expectations. In nearly four years, only USD 616 million has been awarded, and just 55 NEVI charging stations have been installed.  

While the US government is scaling back its EV initiatives, the impact on Latin America is expected to be limited. The region’s EV market is still in its infancy compared to the US and Europe and its primary production hubs (Brazil and Mexico) are taking different approaches. 

Brazil remains largely insulated from US policy changes, as its automotive industry continues to focus primarily on internal combustion engine vehicles (“ICEVs”) for the domestic and South American markets. Electrification in Brazil has been slow, with hybrids gaining more traction than full EVs. This trend aligns with the country’s existing biofuel infrastructure, making flexible-fuel and hybrid vehicles a more practical solution in the near term. 

Mexico remains heavily reliant on the US auto market, with around 2.8 million vehicles exported to the US in 2024, representing 80% of the country’s total car exports. Despite this strong connection, Mexico’s EV production remains limited, accounting for less than 10% of its total vehicle manufacturing. Annual EV output is slightly above 100,000 units, according to the Spanish Institute for Foreign Trade (“ICEX”) and the National Institute of Statistics and Geography of Mexico (“INEGI”). While this figure reflects an increase from previous years, the suspension of NEVI and the broader shift in US EV policy could slow further investment in Mexico’s EV sector. 

Chile has emerged as a leader in vehicle transition policies, yet even there, government-approved initiatives have faced repeated delays. The most ambitious environmental regulation in the region, EURO 6c, was initially set to be implemented in 2024 but has now been pushed to the second half of 2025. The primary challenge is the lack of infrastructure necessary to enforce the law effectively and concerns are mounting that further delays may occur.  

“The main problem that I can see with environmental regulations is the lack of predictability, especially in the regulation of environmental law.” A consultant at the National Automotive Association of Chile continued, “For example, the Energy Efficiency of Vehicles Law was published in February 2021. However, the Regulation Decree only came out in August 2024, four and a half years later.” 

“The main problem that I can see with environmental regulations is the lack of predictability, especially in the regulation of environmental law.”

A consultant at the National Automotive Association, Chile

Regulatory uncertainty is a major worry for industry stakeholders. “This situation has never previously happened and it is very negative to the sector, which always works based on clear rules, knowing in advance what the fine formula is, the standard, clearly and in advance.” The consultant in Chile added, “We are worried that this tendency will continue creating more unnecessary uncertainty.” Given these developments, it appears that hybrids may regain prominence as a more viable alternative to full EVs. 

Meanwhile, government policies in Latin America are facing scrutiny. “At the political level, there is an apparent consensus to implement the highest environmental standards in the region, and that’s fine,” remarked a finance executive. “But this is mixed with a bureaucracy that is overly eager to implement these objectives in a very zealous way, to gain approval from international institutions, overlooking practical realities and real-world challenges.” 

Chile, in particular, has historically aligned itself with US regulations. “Chile has long had an environmental authority and often models its regulations after US standards,” informed a board member from the Automotive Trade Chamber of Chile. “Pollution taxes have been generated, so Chile, like other countries, copies the US legislation/rich countries where those who want to pollute must pay.” However, some argue that these taxes ultimately harm consumers rather than manufacturers, with the board member concluding, “The authorities believe that they are punishing the manufacturer, but in the end, they are punishing the end users who want to buy a car.” 

“The authorities believe that they are punishing the manufacturer, but in the end, they are punishing the end users who want to buy a car.”

A board member from the Automotive Trade Chamber of Chile

The suspension of NEVI marks a turning point and while EV adoption continues to grow, infrastructure challenges and shifting political priorities have moved the transition down a gear. Latin America, still in the early stages, faces its own set of regulatory and logistical hurdles. “The industry is very uncomfortable with the way the process has been conducted, with little consultation and delays,” stated an automotive consultant. As a result, hybrid vehicles - already a preferred option in many regions - may emerge as the most practical bridge between traditional petrol-powered cars and the long-term goal of being fully electric. But one thing is clear: the road to an all-electric future is proving to be far rockier terrain than initially envisioned.