Autobayng News Team
At midnight on Tuesday, the long-running clean-vehicle tax credit bit the dust. It was one of the last vestiges of federal support for the electric car industry in the Trump era and a key driver of transportation electrification in this country.
For proof of the latter, just look at what happened over the last few months as car buyers scrambled to get $7,500 off of an electric vehicle for potentially the last time ever. From the beginning of July (when Republicans’ sweeping budget bill formalized the tax credit’s demise) through the end of September (the policy’s new expiration date), Americans snapped up a record 410,000 new EVs, Cox Automotive estimates.
But what happens next? What does the post-subsidy EV era look like? I asked industry experts what they think. They agreed that this was bad news for EV fans this year, but that it’s too late to stop the inevitable EV revolution.
In The Short Term, Things Will Get Ugly…
A hangover is coming after Q3’s EV party, analysts said. Partly because so many people pulled forward their EV purchases to snag a tax credit, the next couple of quarters may see a sharp drop in demand.
“It’s going to be a choppy period of time ahead,” said Aleksandra O’Donovan, head of electrified transport at the research firm BloombergNEF.
After a roughly 30% gain in Q3, BNEF expects plug-in vehicle sales to plummet by 24% year-on-year in Q4. The firm believes 2026 sales share will be roughly flat, as compared with 2025.
There will be a recalibration period, analysts said, during which automakers tease out what organic EV demand looks like and how to meet it. Auto executives are gearing up for a demand slide in the coming months.
“We’re going to see some noise in October and November, and I expect that EV demand is going to drop off pretty precipitously,” General Motors CFO Paul Jacobson said during a recent investor event, according to CNBC.
…But EV Adoption Will Pick Up Over Time
Over the longer term, experts agreed that electric cars will gobble up more and more of the U.S. vehicle market. But that won’t happen nearly as quickly as it could have under the Biden administration’s pro-EV policies.
“We’re not going to see the astronomical growth we saw over the past few years, but we’re going to see some growth come back,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. His forecast, which is on the conservative side, projects a 12.8% EV market share in 2030, up from around 8% last year.
This slower growth forecast is not just the result of the tax credit going away. The One Big Beautiful Bill Act eliminated the fines that manufacturers would have to pay for failing to meet escalating fuel-economy targets. The Environmental Protection Agency is targeting the bedrock of tailpipe emissions rules. Congress revoked California’s ability to set its own EV sales regulations in a controversial move that could be overturned by the courts.
It all means that automakers won’t be under the same pressure to make sure EVs sell well, O’Donovan said.
“Really the future is down to, for lack of a better word, the goodwill of automakers on delivering on the plans that they had previously, on delivering those more affordable EVs and those desired vehicle segments,” she said. To be sure, carmakers will also react to consumer demand.
BNEF now projects that EVs and plug-in hybrids will make up around 27% of U.S. car sales by 2030, a far cry from the 48% share it estimated in its pre-Trump forecast. The firm now says that pure EVs will account for roughly 19% of sales by that date, revised down from 37%. (Those forecasts assume the California waiver remains in place.)
Better Tech And Competition Will Drive Growth
Why will America’s EV market grow even with most policy dials set to zero?
EV technology is improving at a breakneck pace, stoking demand. Mercedes-Benz and BMW just announced bold, next-generation EVs—each with over 400 miles of range and ultra-fast charging. Charging infrastructure is getting more powerful, reliable and widespread. And a broader choice of models is on the way. The 2026 BMW iX3 is one of several high-tech EVs launching soon. Photo by: BMW
“[EVs] continue to become better substitutes for buying an internal combustion engine car,” said Elaine Buckberg, a senior fellow at Harvard’s Salata Institute for Climate and Sustainability and a former chief economist at General Motors. “GM market research going back years basically said people are perfectly open to an EV as long as they don’t have to give up anything they like about their [internal combustion engine] car.”
Moreover, today’s pricey EVs will eventually cost about as much or less than gas-powered equivalents due to falling battery prices.
“The biggest driver long-term is really the improving economics of electric cars,” O’Donovan said. “There’s no doubt about the fact that consumers will always choose the cheaper technology.”
There’s also outside pressure on manufacturers to keep investing in EV technology. The U.S. may be a laggard now, but the rest of the world is rapidly heading in a zero-emission direction. Chinese companies aren’t slowing down, and they could sell EVs in the U.S. someday despite today’s 135% tariffs. More EV Market News
Kevin Tynan, director of research at The Presidio Group, an automotive investment and banking firm, said automakers have squeezed what they can out of the shift to larger trucks and SUVs, so they need a new growth engine.
“Automakers have to figure out a way to make electrification work from a profitability perspective, because it’s the next technology,” he said.
Electric Cars Will Get More Expensive, But Not Right Away
Profitability is still a distant goal for most EV makers, and losing the tax credit won’t make that any easier. The good news for EV buyers, though, is that the loss of the credit won’t spike prices overnight.
After years of stubbornly high prices, EVs actually got slightly cheaper than gas vehicles this summer, according to J.D. Power. And they may stay that way for a few months for one simple reason: manufacturer incentives. Hyundai slashed prices for the 2026 Ioniq 5 by nearly $10,000 just as the EV tax credit expired. Photo by: Patrick George
Automakers will still have tons of electric cars in inventory over the next few months—roughly 200,000 at the start of Q4—and they’ll lather on offers to move them off of dealer lots, said Tyson Jominy, J.D. Power’s senior vice president of data and analytics. That’s the same dynamic that pushed average EV prices down in recent months.
“We’re going to have a lot of EVs to sell in October, and automakers are going to have to step in and do something,” he said. “You don’t want vehicles sitting around on the lot.”
It’s already happening. Hyundai on Wednesday announced that it would slash pricing of the 2026 Ioniq 5 by up to $9,800.
More EVs Could Get Canceled
Automakers have been pulling back hard on their EV plans. Here’s a list of some recent moves:
- Acura discontinued the ZDX after just over a year on the market
- Nissan canceled the Ariya and shelved plans for two electric sedans
- Honda reportedly scrapped development of an upcoming three-row EV
- Mercedes-Benz stopped sales of its EQ models in the U.S.
- GM said a plant previously set aside for EV-only production would make gas-powered trucks instead
- Ram canceled its battery-electric truck
- Genesis axed its electric sedan
Amid tariff pressures, relaxed regulations and, now, the loss of a key tax credit, more cancellations could be on the way.
“Currently there are far too many models and far too much volume for the demand, and so manufacturers will pare down their offerings,” Fiorani said. “Vehicles that don’t really see long-term growth or midterm growth will disappear. And over the next four years or so, we’ll see this balancing of demand and supply.”
While automakers may decrease their investments at the margin for short-term gains, they won’t back off completely, Buckberg said.
“I think long term they know they need to win in EVs and that market share can also be very persistent,” she said. “So getting market share now is important to that long run.”
Contact the author: Tim.Levin@InsideEVs.com More EV News You Need To Know
