One of the big issues with EVs is that several countries collect a lot of revenue from taxes on fossil car fuels. Those revenue streams will shrink, meaning that something else will have to be taxed to make up the shortfall.
Will the West pay back its debt? Well, that's barely a meaningful question. If you're thinking of government debt (which is not equivalent to Western debt), then EVs are neither good nor bad. If revenue drops from one source, it will be taken from another source instead.
The much bigger threat to car manufacturers is self-driving vehicles. Those could reduce vehicle demand by a huge proportion, if (as expected) they trigger a growth in shared ownership of vehicles. Most cars are used for only a tiny fraction of the time. And even at rush hour, only a minority of cars are in use at any one time.
EVs currently differ from fossil cars in that they have higher capital expenditure, and lower operating expenditure. That will make household cash outflow much lumpier.
However, this also encourages the move towards shared ownership of self-driving EVs, which, for those households that choose it, will remove the capital expenditure element, making their cash outflow much smoother.