Somebody flipped the lights on at the EV party, and a year later the market is still nursing a hangover. The federal EV tax credit, worth up to $7,500, ended on Sept. 30, 2025, and the numbers since then tell an uneven story.
Hybrids are flying. Used EVs are having a moment. And some of the biggest names in Detroit are quietly writing very large checks to clean up the mess.
How the EV tax credit actually ended
The credit died under the tax-and-spending package Trump signed on July 4, 2025, known as the One Big Beautiful Bill Act. Per IRS guidance relayed by The Auto Wire, the New Clean Vehicle Credit is “not available for vehicles acquired after Sept. 30, 2025.”
Buyers who signed a binding contract and made a payment by that date kept the credit, even if the car showed up later. Everyone else lost it.
Lawmakers created the credit in 2008 and the 2022 Inflation Reduction Act expanded it, so this was a big reversal. It also arrived as Congress was adding to the red ink, which the $2 trillion budget deficit makes plain.
Loser: EV sales and the automakers behind them
Start with the obvious. EV sales peaked near 10% of the new-car market right before the deadline. Since then, they have hovered around 6%, according to Marketplace, citing Cox Automotive.
The steep drops started right away. Cox data cited by NPR shows EV sales fell 36% year over year in late 2025 and 27% in the first quarter of 2026.
Cox’s July 2026 EV Market Monitor put new EV sales at roughly 77,000, down 41.5% from a year earlier. Tesla still led the pack with about 42,000 units. (Somebody has to.)
A fair caveat: the comparison is brutal. Late 2025 was a pull-forward frenzy, with buyers racing to beat the deadline. That makes any year-over-year number look worse than the underlying demand.
General Motors shows the damage up close. The Auto Wire counts GM’s third-quarter EV sales at 25,473, down 61.7% from 66,501 a year earlier. That is the outlet’s own tally, and GM’s official figure was not available.
Still, the story is plain: GM’s non-EV U.S. sales actually ticked up slightly. In its Oct. 1 release, GM blamed its 6% overall decline on “the much smaller EV market and discontinued vehicles.”
Other automakers are retreating too. Per Marketplace, Honda and Acura canceled an electric lineup, and Ford ended production of its electric F-150. Many automakers have scrapped models and taken billions in losses.
Billions. With a B.
Winner: hybrids, now that the federal EV credit is gone
So where did the buyers go? Hybrids. NPR, citing Edmunds data, reports hybrid sales are up almost 27% over the past year.
Cox Automotive expects Asian brands to gain share as shoppers lean toward hybrids and passenger cars, according to its September sales forecast. Toyota and Honda have spent years betting on hybrids while others chased all-electric. Funny how that worked out.
Here’s the thing, though, and it hits your wallet: losing the electric vehicle tax break is not the whole story. NPR notes hybrid sales jumped in March after the U.S. war in Iran began, and Cox points to higher fuel prices. Pricey gas pushes people toward hybrids with or without Washington’s help.
Winner: used EVs, where the $7,500 EV incentive never mattered
The quiet bright spot is secondhand. Cox reports used EV sales hit about 36,800 in July, up 10.1% from a year earlier.
At Manheim, wholesale EV sales rose 45% year over year in the third quarter. They reached a record 4.9% of transactions, according to Automotive Fleet.
That makes sense. When a new EV costs thousands more without the credit, a cheaper used one starts to look smart. Leasing, meanwhile, is “under pressure from the loss of the federal EV tax” credit, per Cox.
The money trail after the EV tax credit
The pain also hit the balance sheets. A Reuters investigation relayed by Yahoo Finance found that Trump policies, mainly ending the EV tax credit, derailed a wave of EV and battery investment. About 87% of announced EV-related investments were in states Trump won in 2024. We have not independently seen the Reuters piece, so treat that figure with care.
The same Yahoo report says GM took a $6 billion charge, including $4.2 billion in cash tied mostly to canceled supplier commitments. That too is secondhand, and GM’s filings are the place to confirm it.
What comes next for EV buyers
State incentives remain, but Marketplace says they cannot fully replicate what the federal EV credit did. Cheaper electric cars may also come from abroad, like the Citroen 2CV concept aimed at $17,000.
For now, the next test comes from the earnings calendar. GM, Ford and Tesla are expected to report third-quarter results in late October, though the dates are not confirmed. Watch for more EV charges and new guidance.
The big question is whether this is a permanent reset or a pause. If gas prices stay high and used EVs keep getting cheaper, drivers may find their way back to electric on their own. Washington just won’t be paying for the ride.
