🔗 Share this article

It’s easy to assume that EVs are finally gaining momentum in the US.

After all, sales of battery-powered cars exceeded 1.2 million last year, more than five times the figure just four years earlier.

Sales of hybrid vehicles have jumped by a threefold.

Battery-powered cars represented 10% of overall sales in August—a record level, according to industry data.

Additionally, reports to investors this week from General Motors, Ford, Tesla and others all reported unprecedented EV sales over the past three months.

This represented a bright spot in an sector grappling with the fallout from elevated interest rates and buyers on edge over inflation, tariffs, and the wider economy.

Experts Identify a Short-Term Boost

But market watchers explain the boom was driven by a rush to purchase before the expiration of a federal incentive that helped knock as much as $7,500 off the cost of eligible electric and alternative fuel cars.

Now that the incentive has expired as of the end of September, carmakers are expecting momentum to decline sharply.

"It's going to be a dynamic industry, but it's going to be more limited, significantly reduced than we thought," one automaker executive stated this week.

"I expect that EV demand is going to decline sharply," a senior official added, explaining it would take time to see how soon buyers would return.

American Lags Behind Global Uptake

Despite the recent gains, the United States, the world's second biggest car market, appeared as a slow adopter in electric car sales relative to many other nations.

In the UK, for example, sales of battery electric and hybrid cars made up nearly 30% of vehicle purchases in the previous year, while in the European Union, they represented about 20% of sales.

In China, the largest auto market worldwide, adoption of such cars made up nearly 50% of total sales in the prior year, and they are projected to exceed half this year.

Take-up in nations like Norway and Nepal is higher still.

Electric vehicles tend to make up a lower percentage of sales in developing regions and other parts of Asia—but growth there has been accelerating rapidly.

Government Divergence

Analysts say uptake in the US has been hindered by comparatively weak government support for the sector, which has restricted the types of incentives, trade-in programmes, and rules that have helped the industry in nations such as Europe and Asia.

The previous administration made efforts to boost adoption, aiming for electric cars to represent half of all sales in the United States by 2030.

That administration strengthened standards on emissions, increased interest through public sector acquisitions, encouraged manufacturers to put money with financial support for EV investments, allocated funds building charging stations, and enhanced the $7,500 incentive as a inducement for buyers.

Supporters cast those efforts in part as a strategic necessity, cautioning that absent such measures American manufacturers would face disadvantages to competitors from China and other countries.

However, the current administration has pushed to scrap several policies, including the $7,500 credit, claiming that they were pushing people to buy cars they would not otherwise want.

"Our position is ... you're not going to be forced to make all of those cars," one official stated recently, while signing a bill designed to repeal regulations that would have phased out sales of gasoline vehicles in a major market by 2035. "You can make them, but it'll be by the market, judged by the market."

Affordability Is Still a Challenge

EVs have become less expensive in the United States in the past few years—but they remain pricier than comparable petrol-powered vehicles.

And, automakers from China like a leading brand, which have made rapid inroads in international regions due to low prices, have been effectively shut out of the US market, due to high tariffs on cars made in China, supported by the last two presidential terms.

By late summer, the average transaction price of an electric car in the US was over $57,000, about 16% higher than the average for all cars.

The least expensive EV available, a Nissan Leaf, is priced around $30,000. In contrast, several models can be purchased for under £20,000 in the UK.

Future Outlook

Experts believe what consumers choose next depends on how automakers set prices in the coming months, as they face not only the expiration of the subsidy but also duties on imported vehicles and specific components imposed this spring.

One automaker announced recently it would offset the loss of the incentive by lowering the price for its range of EVs. But a competitor said the cost for leasing options of select models would increase.

One industry analyst said she did not expect to see most companies follow that example, given the challenges from tariffs.

While some buyers may opt for EVs anyway, "the coming year is going to be challenging," she cautioned, noting that the research group is calling for overall car sales to fall by about 2% in 2026.

"It would have been challenging if all you had to deal with is recent duties, but with new tariffs and the subsidy expiring, there's a double effect."

Investment Reductions

Carmakers had already been reducing their investments in EVs.

Researchers suggest new regulations could reduce those commitments further.

"This is a major blow to the electric vehicle sector—there's no tiptoeing around it," noted an industry expert.

"These incentives were initially a way to create fairness and now that they're removed the United States has a lot of ground to achieve."

However, another analyst said she was reluctant to declare the US behind in an industry still testing out different options.

"Is electric the best solution?" she asked. "Saying that we're behind presumes that this is the only and best solution and I think it's premature to make that claim."