Electric vehicle sales plummet after federal tax credits end, but recovery may be on the horizon

The electric vehicle market took a significant hit after federal tax credits expired on September 30, with sales dropping dramatically in the following months. According to S&P Global Mobility estimates, EVs represented just 5.3 percent of US new car and light truck sales in November—less than half the record high achieved in September when the incentives were still in place.

The sharp decline highlights how heavily the early EV market has relied on government incentives to drive consumer adoption. The federal tax credits, which provided up to $7,500 off the purchase price of qualifying electric vehicles, had been a crucial factor in making EVs more affordable and competitive with traditional gasoline-powered cars.

However, industry experts suggest this downturn may be temporary. The EV market is still in its early stages, and several factors could drive recovery in the coming months. Automakers continue to expand their electric lineups with more affordable models, charging infrastructure is rapidly improving across the country, and many states maintain their own EV incentives. Additionally, falling battery costs and advancing technology are expected to make electric vehicles more cost-competitive even without federal subsidies.

While the immediate impact of losing tax credits has been severe, the long-term trajectory for electric vehicles remains positive. The challenge now is whether the market can sustain momentum through this transition period as the industry works toward making EVs accessible and appealing to mainstream consumers without relying on government incentives.