U.S. faces sharp drop in electric vehicle sales after tax credit ends

Americans may see smaller electric vehicle choices soon, even as buyers worldwide accelerate the shift to clean vehicles.

Sales of U.S. electric vehicles (EVs) surged past 1.2 million last year, over five times the count of just four years earlier. But now, with a key federal tax credit expired, carmakers warn that momentum could reverse.

“The industry is going to be vibrant, but way smaller than we thought,” Ford CEO Jim Farley told attendees at a recent event. GM CFO Paul Jacobson added, “I expect EV demand is going to drop off pretty precipitously.”

Analysts say one reason the U.S. lags behind China and Europe is weaker government support. In the U.K., EVs and hybrids made up nearly 30% of new car sales. In China, such vehicles account for nearly half of all sales.

Since President Trump’s administration pushed to eliminate many EV incentives, including a $7,500 tax credit, automaker investments are expected to slow further. Some also point to high U.S. car prices and tariffs on imports as barriers to faster growth.

The average price of an EV in the U.S. stood near $57,000 as of August, about 16% above the average price of all cars. Hyundai has already offered discounts, while Tesla said lease payments will rise without subsidies.

Even with remain­ing gains, industry watchers warn next year will be tough. “Next year is going to be hard,” said Stephanie Brinley, associate director at S&P Global Mobility, citing both tariffs and the lost subsidy.

Still, some voices urge caution before declaring U.S. electric car policy a lost cause. “Saying that we’re behind assumes this is the only and best solution,” Brinley said. “I think it’s a little early to say that.”

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