2020 and 2021 brought a flurry of investment into electric vehicles (EVs) as virtually every major legacy automaker implemented new programs centered around lowering emissions and improving sustainability.

But in 2022, the landscape of the auto industry, including EVs, was heavily impacted by rising interest rates, inflation, supply chain issues, and an increasingly crowded list of competitors.

Many legacy automakers now find themselves overextended just as consumer spending is taking a hit. in time for a decrease in consumer spending. The consumer car market is cyclical and heavily influenced by rising interest rates, which make it more expensive to finance a car. Given that most cars are purchased with debt, this is a big headwind for the auto industry going forward. Pair that headwind with the fact that it could take years for many of these legacy automakers to have profitable EV lines (not to mention reliable battery production and supply chains), and it's a one-two punch of slowing growth and compressed margins.

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Source Fool.com