With changes in administration, the transportation sector is anticipating change. Here are four transportation trends to watch in 2025 and beyond:
Challenges and Opportunities for EVs: A Tale of Two Markets
The electric vehicle (EV) industry in the U.S. faces several significant threats in 2025. A potential rollback of the Biden administration’s pro-EV policies could hinder EV adoption.
Meanwhile, China is experiencing a surge in EV production, with domestic manufacturers flooding the market with attractive options and benefiting from government incentives. This contrast highlights the different trajectories for the EV markets in the U.S. and China. American automakers in China struggle to compete, as most still produce combustible engines, and their struggles in China are negatively impacting their bottom lines globally.
While pure EVs face an uncertain future, hybrids are enjoying a resurgence. Hybrids offer the benefits of lower fuel costs without the range anxiety associated with pure EVs. Additionally, if there is a focus on expanding oil supplies in the U.S., as the incoming Trump administration has promised, both hybrids and traditional combustible engines could benefit from lower fuel prices.
Robotaxis and Autonomous Vehicles (AVs): Mostly Hope on the Horizon
The National Highway Traffic Safety Administration (NHTSA) is the U.S. Department of Transportation agency responsible for regulating the safety, design, and performance of all motor vehicles and motor vehicle equipment—including AVs. While the first Trump administration embraced AVs with a relatively hands-off regulatory approach, the Biden administration tightened regulations, leading to a decline in optimism. With Trump’s return, his proposed pick, Sean Duffy, to lead the NHTSA does not shed much light on the future of AVs due to his lack of transportation experience.
However, with Elon Musk co-leading a new Department of Government Efficiency (DOGE) under Trump, regulations hindering AV development will likely be revisited, potentially paving the way for faster progress. Musk’s Tesla is betting big on autonomous vehicle features and robotaxis. Musk advocates for a federal approval process for AVs, rather than the current state-by-state approach, and likely wants the NHTSA to ease its investigations into Tesla’s driver assistance features.
Unlike Tesla, GM has busted its robotaxi bet with its decision to exit the robotaxi race. Additionally, Apple has canceled its California permit after putting $10 billion into its AV unit. Both exits highlight the challenges in this industry. Regulatory hurdles and resource demands have proven to be significant roadblocks. However, Amazon has entered the robotaxi space with the rollout of its Zoox cars in San Francisco.
Despite the industry’s struggles, consumer confidence in AVs is improving, which bodes well for the future of the technology. So much so that I’m hopeful we’ll soon see AVs portrayed as heroes in films and media, rather than the villains in dystopian classics like Maximum Overdrive, Christine, and Minority Report.
However, one audience that may continue to harbor negative sentiments towards AVs (and robotaxis in particular) is rideshare drivers. Early signs from cities like Phoenix and Los Angeles suggest that AVs are already impacting driver earnings. How drivers respond to this disruption remains to be seen.
Heavy Rail: Revival or Risk of Budget Cuts?
Unlike other sectors, passenger rail is experiencing a resurgence in the U.S. Brightline, which currently provides rail travel between Miami and Orlando, is building a bullet train from Southern California to Las Vegas. There’s even talk of bullet train possibilities in Texas. With these new lines being built, most are excited for passenger rail’s future. Trump’s re-election, on the other hand, has caused rail watchers to fear for future funding, as historically, Republican administrations tend not to favor rail and transit. These concerns are heightened by the new administration’s laser-focus on cost-saving measures, with many expecting DOGE to target rail for budget cuts.
Public Transportation’s Comeback: Will Return-to-Office save the day?
Amazon announced the termination of its hybrid work program starting in 2025. If other companies follow suit, public transit ridership could return to pre-pandemic levels, helping cities to avoid their “fiscal cliffs” and rekindle their “9-5 City” natures.
Public transit ridership is already trending upward, according to third-quarter 2024 data from the American Public Transportation Association. However, it remains to be seen if this trend will be enough to save public transit, as they also face potential scrutiny under DOGE and the incoming administration.
As we enter 2025, the transportation sector will continue to evolve, with various factors influencing its direction. Keeping an eye on these trends will be crucial for understanding the future of transportation.
