U.S. Electric Vehicle Sales Recover After Subsidies Expire

Sales of battery electric vehicles in the United States are up for the second quarter in a row after demand cratered in Q4 of 2025 as EV tax credits ended. Q3 of that year saw a rush of buyers at the last minute taking advantage of the credit that was canceled by the Trump administration, resulting in the sale of almost 440,000 EVs in the U.S. between July and September 2026. Q4 of 2025 saw sales numbers reduced by 44 percent. As of the latest figures for Q3 of 2026, demand has recovered some, but stayed behind levels of recent years when tax credits were active.

Analysts at Cox Automotive see the market gaining strength as new models have started sales and prices have become more competitive. Gas prices that have stayed well above average amid the Iran war are also a factor likely adding to some buyers decision to make the switch. While new EV models are seen as driving sales for automakers like Toyota, Lexus and Subaru, market leader Tesla is not innovating their mass market offering, instead choosing an exclusive sports EV as their only new release in years.

Despite the rebound, the loss of subsidies is for now shrinking the U.S. EV market at a time when the European market continues to expand on the back of continued incentives and higher gas prices in general. A record 23.2 percent if European car sales are now EV, while the comparable U.S. share stands at just 6 percent, down from 8.5 percent at its height last year. In lieu of the subsidy, hybrid cars became more popular in the U.S., reaching 15.6 percent of total sales.