Experts predict a sharp decline in electric vehicle sales for Rivian, Tesla, and Lucid Group starting late 2025, driven by the end of U.S. tax credits. This could make demand 'dreadful' next year, according to research cited in The New York Times. While short-term challenges loom, long-term EV adoption remains promising.
Electric vehicle makers Rivian (RIVN 1.20%), Lucid Group (LCID -4.29%), and Tesla (TSLA 2.58%) face a dual threat in 2026: the loss of automotive regulatory credits, which previously generated billions in profit but now hold zero value due to regulatory changes, and a looming sales slump.
Research published in The New York Times forecasts that EV sales will be 'dreadful' in 2026, with a plummet expected in the last three months of 2025 and sluggish performance persisting afterward. The key trigger is the U.S. government's elimination of tax credits for EV purchases at the end of September 2025. These credits had reduced vehicle costs by up to $7,500—for instance, turning a $55,000 EV into an effective $47,500 purchase. Recent polling indicates nearly 70% of American consumers prefer cars under $50,000.
Similar subsidy cuts led to demand cliffs elsewhere: in Germany in 2023 and Canada in 2025. Much of the upcoming dip stems from a 'lumpy order book,' as buyers rushed purchases before the September deadline, potentially inflating this quarter's figures while depressing the next. Investors should view any short-term demand upticks skeptically.
Among the companies, Tesla may fare best, with reliable capital access to pursue robotaxis and a $30,000 model, appealing even without incentives. Rivian plans to launch its $45,000 R2 early next year, followed by cheaper R3 and R3X models, staying under the $50,000 threshold. Lucid, however, faces the toughest path, with affordable models targeted for December 2026 at earliest, delayed by financial constraints and other investments like robotaxis.
Despite rocky quarters ahead, EV adoption is still projected to grow long-term, suggesting opportunities for strategic investor reallocation rather than outright abandonment.