Electric vehicle sales plummet after federal tax credits end, but experts say growth will continue

Electric vehicle sales in the United States took a dramatic hit in October, with new EV sales dropping 50% and used EV sales falling 20% compared to September. The steep decline followed Congress’s decision in July to end federal tax credits worth up to $7,500 for new EVs and $4,500 for used ones on September 30—years ahead of their original expiration date.

Despite the sharp downturn, industry analysts remain optimistic about the long-term trajectory of electric vehicle adoption. “We’re definitely gonna see a slowdown,” said Stephanie Valdez Streaty of Cox Automotive, “but it’s not going to just stop.” EVs are still on track for record sales this year and now represent about 8% of the overall auto market, up from just 2.3% five years ago.

Several factors are expected to sustain EV growth even without federal incentives. Battery costs continue falling, making electric vehicles more affordable, while the price gap between used EVs and gas cars has narrowed to just $900. By 2026, analysts predict 16 electric models will be available for under $42,000—double today’s options. Additionally, a wave of lease returns will flood the used car market with more affordable EVs.

While political headwinds including tariffs and weakened fuel economy standards pose challenges, many automakers are maintaining their electric vehicle commitments. Seventeen states now offer their own EV incentives, with Colorado and Connecticut recently increasing their rebates. As Kathy Harris from the NRDC noted, lower operating costs from avoiding gas purchases and reduced maintenance make EVs increasingly attractive despite higher upfront prices.