Sales of electric vehicles have plummeted.
Nationwide, dealers sold about 20 percent fewer used electric vehicles in October than in September, and a staggering 50 percent drop in new ones, according to the latest data. Nobody was surprised. In July, Congress voted to end the federal tax breaks that helped consumers afford them on Sept. 30, several years before they were set to expire. This led to a sharp increase in purchases before the deadline and a sharp drop after it.
Safe · No tax deduction · Takes 45 seconds
Safe · No tax deduction · Takes 45 seconds
The question now is whether this decline is a sign of a prolonged decline or just a blip on an upward trajectory. While only time will tell, many analysts believe EV adoption in the United States will continue to grow—though perhaps not at the same pace as before Congress rescinded the credits and automakers began to second-guess themselves.
“We will definitely see a slowdown,” said Stephanie Valdez Streety, director of industry analysis for Cox Automotive. Eliminating the federal credit of $7,500 on new electric vehicles and $4,500 on used ones certainly has implications. But prices for batteries, and therefore cars, also continue to decline. Used models is becoming an increasingly better dealtoo much. As of this fall, the price gap between used electric vehicles and their gas-powered equivalents has narrowed to just $900. In China, according to Valdez Streety, electric versions of cars are often already cheaper than their traditional counterparts.
“It’s not just going to stop,” she said of the dynamics in the United States. “It will be a gradual rollout, but I still think we are making progress.”
Even with the downturn, electric vehicle sales are at a record pace this year, accounting for about 8 percent of the overall market. It's somewhere nearby 2.3 percent five years ago and just 0.66 percent ten years ago. Valdez Streety expects the trend to continue, as does Liz Nyman, director of market intelligence at Recurrent, which provides data on electric vehicles. She said a slew of new, more affordable models will hit the market next year, including updated versions of the Nissan Leaf and Chevrolet Bolt, which should help boost demand.
There will be about 16 electric models available for under $42,000 by the end of 2026, up from half that price this year, Najman said. And like Valdez Streety, she points to continued downward pressure on used car prices as driving adoption of the technology. In particular, dealerships have been offering a lot of electric vehicle lease deals in recent years, and many of these vehicles are nearing the end of their expiration date and will soon hit the used car market.
“There are a lot of opportunities for people,” said Najam, who is optimistic about the industry’s prospects. Katie Harris of the environmental nonprofit NRDC notes that electric vehicle owners don't have to buy gas and avoid some basic maintenance jobs like oil changes. This makes cars with cords more attractive. Overall, she says, “even with a higher initial price, there are significant benefits to the total cost of ownership.”
However, the market is certainly battling headwinds.
In addition to eliminating consumer tax breaks, congressional Republicans also eliminated many manufacturing and other corporate incentives for battery and vehicle production. They have also tried to undermine federal fuel economy and pollution standards that encourage production of low- and zero-emission vehicles. For example, in the same bill, Congress eliminated penalties for manufacturers who violate Corporate Average Fuel Economy (CAFE) standards. This allows companies to produce more profitable but less fuel-efficient vehicles such as SUVs and pickup trucks without fear of fines. Under President Donald Trump, the Environmental Protection Agency also reversed California's refusal to set its own emissions standards.
A number of these changes are currently the subject of litigation (for example, in California sued the Trump administration to maintain its tailpipe regulations), and analysts are watching these cases closely. The same goes for Trump's high tariffs, which have also put upward pressure on the cost of all new cars. Electric vehicles will be particularly hard hit, as batteries are typically shipped overseas and can account for up to 40 percent of a vehicle's cost.
All this uncertainty has led to several manufacturers announce a rollback of its electric vehicle plans. But Najman notes that many also defended their position; In particular, she called on Hyundai to expand its electric vehicle offerings. “These are companies that have already made their commitment to electric vehicles clear in both word and action,” she said. This disruption “won't really slow down their success.”
Some states are trying to step in to fill the void left by the federal government. Since these credits were eliminated, Colorado and Connecticut have increased their credits or rebates ($3,000 and $500, respectively). In total, Valdez Streety said, 17 states offer incentives for purchasing electric vehicles. And, with the exception of the United States, Harris believes that manufacturers will continue to produce more and cheaper electric vehicles because that's what customers in the rest of the world want.
“It's very clear that the market is still moving in that direction,” she said. “I hope”.
