Electric vehicle sales in the US fell dramatically in October following the abrupt end of federal tax credits. Dealers reported a 20 percent decline in used EVs and a 50 percent drop in new ones compared to September. Analysts predict a slowdown but expect continued growth in adoption.
The decline came after Congress voted in July to terminate the federal tax credits—$7,500 for new EVs and $4,000 for used ones—effective September 30, well ahead of their original expiration. This prompted a surge in purchases before the deadline, followed by the sharp drop.
Stephanie Valdez Streaty, director of industry insights at Cox Automotive, acknowledged the impact: “We’re definitely gonna see a slowdown.” However, she emphasized that momentum persists. Battery prices are falling, narrowing the cost gap for used EVs to just $900 compared to gas equivalents. In China, EVs often cost less than conventional cars. Valdez Streaty added, “It’s not going to just stop... It’s going to be gradual adoption, but I still think we’re going forward.”
Despite the dip, EVs are on track for record sales this year, comprising about 8 percent of the market—up from 2.3 percent five years ago and 0.66 percent a decade earlier. Liz Najman, director of market insights at Recurrent, highlighted upcoming affordable models: by the end of 2026, around 16 electric options will be available new for less than $42,000, double this year's figure. She noted that expiring leases will flood the used market, and praised commitments from companies like Hyundai. “These are companies that have already made their commitment to electric vehicles clear both in terms of words and actions,” Najman said. “This blip is not really going to slow down their success.”
Kathy Harris of the Natural Resources Defense Council pointed to ownership benefits: no gas costs and reduced maintenance like oil changes, offering “significant total cost of ownership benefits even with the higher upfront price.”
Challenges include the loss of manufacturing incentives, weakened fuel economy standards, and eliminated CAFE penalties, allowing more SUVs and trucks. The Trump administration revoked California's emissions waiver, though litigation continues. Tariffs also raise costs, especially for imported batteries comprising up to 40 percent of EV value, prompting some manufacturers to scale back plans.
Some states are responding: Colorado increased rebates by $3,000 and Connecticut by $500, with 17 states total offering incentives. Globally, demand drives production, as Harris noted: “It’s quite clear that this is still where the market is going.”