U.S. Electric Vehicle Sales Surge 21% Amid Expiring Tax Credit
Automakers in the United States reported a sharp rise in sales of new electric vehicles (EVs) last quarter, giving the industry a boost despite lingering uncertainty tied to changes in President Donald Trump’s trade policies, Bloomberg reports.
Consumers rushed to take advantage of the $7,500 federal EV tax credit, which expired on September 30. This rush drove EV sales up 21% compared to the same period last year, reaching a record 10% share of total vehicle deliveries, according to Cox Automotive.
The momentum prompted Cox to raise its seasonally adjusted annual sales forecast to 16.1 million vehicles, up from its June projection of 15.7 million.
At the same time, U.S. automakers hit by shifting policies have been scaling back EV production and adjusting plans by introducing more gasoline-powered and hybrid models. This created a favorable market for EVs as manufacturers hurried to clear inventories, while lower interest rates helped ease affordability concerns for some buyers.
Notably, 2026 will mark the first year in nearly 15 years that the U.S. federal government will not subsidize EV purchases.
Most industry analysts expect a slowdown in EV sales in the coming quarters since, without federal incentives, EVs remain more expensive than gasoline-powered cars. In August, the average EV sale price was about $9,000 higher than comparable internal combustion models.
“I wouldn’t be surprised if U.S. EV sales fall back to 5%,” said Ford Motor Co. CEO Jim Farley during a speech in Detroit on Tuesday. “The EV market will end up being much smaller than we anticipated.”
Some EV advocates had hoped that states like California would step in to replace the federal incentive. However, California Governor Gavin Newsom dismissed that idea on September 19, confirming the state would not replace the $7,500 federal tax credit.
According to Cox, the biggest beneficiaries of the sales surge during the first two months of the quarter were Tesla’s Model Y and Model 3, Honda Prologue, Chevrolet Equinox, Hyundai Ioniq 5, and Ford Mustang Mach-E. Meanwhile, Ford, General Motors, Toyota, and Hyundai expanded their overall market share, while Stellantis NV—the parent of Jeep, Ram, Dodge, and Chrysler—saw a slight decline.
Some buyers are already worried about higher prices for 2026 models, as automakers seek to offset costs associated with newly imposed tariffs. Based on trade measures announced by Trump this summer, Cox estimates the U.S. government will collect about $100 billion in tariffs this year on imported cars, parts, and materials. This could add $5,500 to the price of imported vehicles and about $1,000 to cars built in the U.S. with imported components, according to Cox chief economist Jonathan Smoke.
And the markup is already visible: new 2026 vehicles are beginning to show higher prices, said Carlos Hidalgo, owner of Chrysler, Dodge, Jeep, Ram, and Hyundai dealerships in California.