The US electric vehicle (EV) market, once seen as a global growth leader, is showing signs of a slowdown after several years of strong gains.
In 2023, Americans bought around 1.2 million new electric vehicles, according to Cox Automotive — more than five times the sales recorded in 2019. Battery-powered vehicles also made up about 10% of all new car sales in August 2025, as per S&P Global Mobility, marking a significant milestone for the US auto industry.
Automakers such as General Motors, Ford, and Tesla all reported strong electric sales in recent months, with many consumers rushing to take advantage of a federal tax credit worth up to $7,500. The incentive had been available for qualifying battery-electric, plug-in hybrid, and fuel cell vehicles but officially expired at the end of September 2025 after 17 years in place.
Industry analysts warn that the end of this tax credit could trigger a sharp drop in new EV purchases. GM’s Chief Financial Officer, Paul Jacobson, recently said he expects demand to “drop off pretty precipitously” as the market adjusts. Ford CEO Jim Farley also acknowledged the challenge, noting, “It’s going to be a vibrant industry, but it’s going to be smaller way smaller than we thought.”
The tax credit phase-out comes at a delicate time for the US auto sector, which is grappling with high interest rates, inflation, and tariff uncertainty. Analysts say these economic pressures could make potential EV buyers hesitant, especially as average vehicle prices remain higher than those of comparable gasoline models.
While hybrid sales have grown steadily up significantly compared to pre-pandemic levels most experts agree that the expiration of federal incentives could stall the country’s broader transition to electric mobility in the short term.
In comparison, China and Europe are at the forefront of the global EV market driven by well-established government support, charging infrastructure improvement, and transparent long-term policies. These circumstances lead to potential concerns that the United States could fall behind in the global electric vehicle race, due to other countries speeding up their electric vehicle zero-emission transportation transition.
Nevertheless, industry leaders are confident that electrification will be a phenomenon that occurs, even if the growth trajectory slows in the short term. Automakers are working to cut costs, launch new models, and expand charging networks. As a result, the future of the US EV market looks cautiously optimistic.
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