Electric vehicle sales hit rough road By EPN Staff Hybrid vehicle sales increased in the United States over the first quarter of 2025 while fully electric vehicle sales fell slightly, according to an Energy Information Administration breakdown of sales estimates by Wards Intelligence. And while generous subsidies for electric vehicles are poised to expire at the end of the third quarter under recently approved federal legislation, consumer demand for EVs, hybrids and even new, efficient gas-powered vehicles are posing increasing challenges for policymakers. Why it matters The shift to electric vehicles impacts quite a few systems: road construction financing, supply chains, electricity demand, among others. As more people drive EVs, there are fewer people paying the state and federal gasoline taxes that generate the vast majority of U.S. road construction funding. And since hybrids, which use a gasoline engine to charge an electric battery, get much better gas mileage, they impact highway tax revenues as well. Electric vehicles and plug-in hybrids draw electricity from the grid, impacting electricity demand – something utility companies need to plan for. For the past two years, federal tax policy has incentivized EV and plug-in hybrid sales with a $7,500 tax credit for new vehicle purchases. But the recently approved federal “One Big Beautiful Bill Act” does away with those credits, effective Sept. 30. The bigger picture The chart for global electric vehicle sales looks a lot like a hockey stick. At the end of 2024 there were almost 58 million EVs on the roads around the world, according to the International Energy Agency. That’s only about 4% of the total passenger car fleet, but it’s more than triple the total electric car fleet from 2021, according to the agency. According to the IEA: More than 20% of new cars sold worldwide last year were electric Almost half of China’s car sales were electric in 2024 The additional 3.5 million electric cars sold in 2024 compared to 2023 is more than the total number of electric cars sold in 2020 China is the world’s biggest and fastest growing EV market. The U.S. market has been growing, too, though it slumped a bit in the first quarter of 2025 and growth in 2024 was about one-quarter that of the previous year, according to the IEA. California has the most EVs on the road, according to the most recent data, followed by Florida, Texas, New Jersey and New York. Europe’s EV sales stagnated last year, the IEA said, as subsidies were phased out or reduced in several major markets. For the rest of the world outside of these major markets, 2024 saw “a record increase in sales of nearly 40% to reach 1.3 million,” the IEA said. Additional details EVs remain costlier up-front than gas-powered vehicles, with the EIA reporting a 25% difference between battery electric vehicles and the industry average sales prices in March, the highest monthly percentage difference since April 2023. Altogether about 22% of the light-duty vehicles sold in the United States over the first three months of the year were hybrids, plug-in hybrids or full battery electrics, according to the EIA. The entire sector was up from about 18% in the first quarter of 2024. Hybrids pulled those numbers up, while declining sales of battery electric models like the Honda Prologue, Chevrolet Equinox and Tesla Model Y declined, the EIA said. Battery electric vehicle sales are more common in the luxury vehicle market: Electric vehicles accounted for 23% of total U.S. luxury sales in the first quarter of 2025 compared to 14% of the total light-duty vehicle market. The luxury segment numbers would have been higher, but Wards Intelligence, which gathers these figures, reclassified the Tesla Model 3 as a non-luxury vehicle at the end of 2024.
