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It would be understandable to assume that electric vehicles (EVs) are finally gaining traction in the United States.
After all, battery electric car sales surpassed 1.2 million units last year, representing a fivefold increase compared to just four years prior. Hybrid vehicle sales have also tripled.
According to S&P Global Mobility, battery-powered cars accounted for 10% of overall sales in August, marking a new high.
In recent updates to investors, major automakers such as General Motors, Ford, and Tesla all reported record EV sales over the past three months.
This positive trend provided a bright spot for an industry grappling with the effects of elevated interest rates and consumer anxieties surrounding inflation, tariffs, and the broader economic landscape.
However, analysts suggest that the recent surge in EV sales was primarily driven by a rush to take advantage of a government subsidy, which offered up to $7,500 in savings on eligible battery electric, plug-in hybrid, or fuel cell vehicles.
With the expiration of this tax credit at the end of September, automakers anticipate a potential reversal in momentum.
“It’s going to be a vibrant industry, but it’s going to be smaller, way smaller than we thought,” Ford CEO Jim Farley stated at a recent event.
General Motors’ CFO, Paul Jacobson, echoed this sentiment at a conference last month, adding that it would take time to gauge how quickly buyers would return, anticipating that “EV demand is going to drop off pretty precipitously.”
Despite recent gains, the U.S., the world’s second-largest car market, lags behind many other regions in EV adoption.
In the UK, for example, battery electric and hybrid cars accounted for nearly 30% of new car sales last year, according to the International Energy Agency (IEA). Latest industry figures suggest that number is even higher.
In Europe, they comprised approximately one in five sales, while in China, the world’s largest car market, such vehicles accounted for almost half of overall sales last year, as per the IEA, with expectations of becoming the majority this year.
Adoption rates are even higher in countries like Norway and Nepal.
Electric vehicles (EVs) generally hold a smaller market share in Latin America, Africa, and other parts of Asia, although growth rates in these regions are accelerating.
Analysts attribute the slower adoption rate in the U.S. to comparatively weaker government support for the sector, limiting the availability of subsidies, trade-in programs, and regulations that have fostered growth in regions like China, the UK, and Europe.
Former President Joe Biden strongly advocated for increased EV adoption, setting a target for electric cars to represent half of all U.S. sales by 2030.
His administration tightened emission standards, stimulated demand through government fleet purchases, encouraged automaker investments with loans and grants, allocated billions to build charging stations, and expanded the $7,500 tax credit to incentivize buyers.
Supporters framed these efforts as a matter of competitive necessity, warning that U.S. automakers risked falling behind competitors from China and other countries without such measures.
However, President Donald Trump, who has previously dismissed climate change as a “con job,” has sought to dismantle many of these initiatives, including the $7,500 credit, arguing that they pressure consumers into buying cars they might not otherwise choose.
“We’re saying … you’re not going to be forced to make all of those cars,” he stated this summer while signing a bill aimed at striking down rules from California, which would have phased out sales of petrol-only cars in the state by 2035. “You can make them, but it’ll be by the market, judged by the market.”
While electric cars have become more affordable in the U.S. in recent years, they still generally command a higher price than comparable gasoline-powered vehicles.
Furthermore, Chinese automakers like BYD, which have rapidly expanded into other markets thanks to competitive pricing, have been largely excluded from the U.S. market due to high tariffs on vehicles manufactured in China, supported by both Biden and Trump.
As of August, the average transaction price of an electric car in the U.S. was over $57,000, according to automotive industry research firm Kelley Blue Book, approximately 16% higher than the average for all cars.
The least expensive battery electric car currently available, the Nissan Leaf, costs around $30,000 (£22,000). In comparison, several models can be found for under £20,000 in the UK.
Analysts suggest that consumer behavior will largely depend on how automakers adjust their pricing strategies in the coming months, as they navigate not only the expiration of the tax credit but also tariffs on foreign cars and certain car parts implemented by Trump this spring.
Hyundai announced this week that it would offset the loss of the tax credit by reducing the price of its Ioniq EV range. However, Tesla indicated that monthly lease payments for some of its vehicles would increase.
Stephanie Brinley, associate director of S&P Global Mobility, expressed doubt that many firms would follow Hyundai’s example, given the pressures from tariffs.
While some consumers may still opt for EVs, “next year is going to be hard,” she cautioned, noting that her firm forecasts overall car sales to decline by approximately 2% in 2026.
“It would have been difficult enough if all you had to deal with is new tariffs, but with new tariffs and the incentive going away, there’s two impacts.”
Automakers had already begun to scale back their investments in electric cars.
Researchers suggest that Trump’s policy changes could further reduce these investments.
“It’s a big hit to the EV industry – there’s no tiptoeing around it,” said Katherine Yusko, research analyst at the American Security Project.
“The subsidies were initially a way to level the playing field and now that they’re gone the US has a lot of ground to make up.”
However Ms Brinley said she was hesitant to declare the US behind in an industry still testing out technology alternatives.
“Is [electric] really the right thing?” she said. “Saying that we’re behind assumes that this is the only and best solution and I think it’s a little early to say that.”
Wolverhampton’s engine plant is due to be the first of the Jaguar Land Rover factories to resume production.
Sales of fully electric or hybrid vehicles made up more than half of all new car registrations in the UK last month.
The carmaker says some of its customers’ data has been stolen in a cyber-attack that targeted a third-party provider.
Genex UK, based in Leamore, Walsall, employs 18 people and majority of it’s business is for JLR.
The rise has been driven by a sharp increase in the value of his electric car company Tesla.
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