As tax credits end, will EV sales continue? Image By EPN Staff Key Points The end of the credits may expose weak consumer demand, especially in states where EV adoption was driven by price incentives. Auto manufacturing states could experience slowed production growth and delayed EV model rollouts. States with aggressive climate or clean vehicle goals may need to create or expand their own incentives to sustain momentum. With record sales fueled by federal tax credits, the electric vehicle market is about to be put to the real test: Will demand continue without the financial incentive that ended Sept. 30? Cox Automotive reported Q3 sales surged almost 30% year over year, as buyers scrambled to scoop up the expiring Biden-era incentives. Based on Kelly Blue Book data, EV sales volume was up almost 41% from Q2 and accounted for 10.5% of total vehicle sales, another record. “Volkswagen, General Motors, Honda and Hyundai saw sizeable gains — VW and GM posted EV sales more than double year-ago levels — and even Tesla managed to eke out an 8% year-over-year gain in the quarter, the company’s first increase in 2025 after seeing sales tumble in the first half,” Cox reported. However, Mercedes-Benz, Toyota and Nissan all sold fewer EVs in Q3 year over year. Why it matters With the ending of the tax credits, the automotive industry is trying to gauge what will happen to EV sales in Q4 and beyond. Cox reported in August 2025, the average EV sold for $57,245, about $9,000 more than the average price for a vehicle with an internal combustion engine (ICE). The average price for a used EV was $34,704, but only about $900 more than its ICE counterpart. Without the incentives, buyers may be more likely to go with the less expensive vehicle. Additionally, battery life and the lack of charging ports nationally complicate matters further. While EV batteries can last 12-15 years in moderate climates, they’re expensive to replace. The expense ranges from $6,000 to more than $15,000, depending on the battery size and model of car. And with the average miles driven on one charge being between 100 and 250 miles, drivers must be strategic to access charging ports on their routes. “The training wheels are coming off,” notes Cox Automotive’s Director of Industry Insights Stephanie Valdez Streaty. “The federal tax credit was a key catalyst for EV adoption, and its expiration marks a pivotal moment. This shift will test whether the electric vehicle market is mature enough to thrive on its own fundamentals or still needs support to expand further.” The bigger picture The Inflation Reduction Act passed under the Biden Administration gave taxpayers who purchased an eligible EV a $7,500 credit for a new vehicle and $4,000 for a used. Those subsidies and others deemed expensive and ineffective were eliminated as Republican lawmakers sought to rein in the massive federal spending approved by Democrats and the Biden administration, and the Trump Administration signaled a shift in energy policy. One report published in April 2025 states that eliminating EV credits could save taxpayers $300 billion by 2035. SUGGESTED STORIES Electric vehicle sales hit rough road 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 vehicl Read more Eliminating electricity sales tax floated for consumer relief In response to increasing costs of residential energy bills, the Wyoming legislature recently considered a first-of-its kind proposal to repeal sales tax on electricity sales. Currently, 21 states offer utility sales tax exemptions for select industries and businesses, although no s Read more Lay all Biden energy credits on the chopping block It’s time to end Biden-era tax giveaways to wealthy coastal elites. The Democrat-passed and signed “Inflation Reduction Act” endowed the tax code with credits for electric vehicles and alternative home energy supply. But data shows that the people buying electric BMWs and in Read more
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