US EV sales are down, but not out. Here’s why automakers won’t pull the plug
By Chris Isidore, CNN
(CNN) — A quick glance at US electric vehicle sales might give the impression EVs are a niche product, unable to shake Americans’ love affair with gas-powered trucks and SUVs.
The recent spike in gas prices did little to lift sales, and the elimination of some tax incentives last year cut into demand. Major auto brands have pulled back on American EV plans. US sales of new EVs fell 20% in the second quarter from a year ago, according to Cox Automotive.
But look under the hood, and the picture is nowhere near as grim.
A rush to buy EVs last year inflated sales, distorting the subsequent drop. A booming international market means automakers can’t afford to give up on EVs entirely. And US EV sales are improving from earlier this year.
“While (US) demand has softened following the expiration of federal incentives, automakers cannot simply walk away from electrification,” said Stephanie Valdez Streaty, director of industry insights for Cox Automotive.
Cause for concern?
There is a lot working against American EVs.
The Trump administration halted many financial incentives that supported the industry, including a $7,500 tax credit for EV buyers last October. It also eliminated financial penalties for automakers who violated emission rules, which had pushed automakers toward building more electric vehicles.
Interested buyers rushed in before the tax incentive disappeared last October, causing sales at the end of the year and start of this one to dry up.
Legacy automakers have taken tens of billions of dollars in charges against their earnings over the last year to downgrade EV production plans. Even Tesla, the lone automaker that made a profit selling EVs to Americans, now seems more interested in creating humanoid robots than cars.
But second-quarter sales rose 15% compared to the first quarter. And US sales of used EVs hit a record, according to Cox.
That’s because the previous incentives and regulations created a false level of EV demand, said Ivan Drury, director of insights for car selling site Edmunds. But with most US tax incentives gone, “we do know there is some level of natural EV demand in the market,” he said.
“While it might not be as good for the consumer, since they might not get as good of a deal, for the industry, there’s far more clarity as to how fast to act and what kind of vehicles to build,” he said.
And all the legacy automakers say they do intend to offer new EV models in the future as they see demand growing for reasons like concerns about the environment and high gas prices.
Eric Straka, a physician living in Ann Arbor, Michigan, paid about $32,000 for a Chevrolet Equinox in May.
The city had its own financial incentive program for EV buyers, depending on buyer income levels and whether the vehicle was new or used. Ann Arbor only had a $500,000 budget for rebates, and it ran out of funds in just days.
Straka is still waiting to get his rebate – but the car was worth it even if he doesn’t, he told CNN.
“It’s like smooth and quiet, and by far the best pickup acceleration I’ve ever had in a car” he said.
EV sales surging overseas
Sales continue to rise in the rest of the world, most prominently in China but also in Europe.
Most other countries still have EV incentives, and drivers there pay higher prices for gasoline or diesel.
The International Energy Agency estimates that pure battery electric vehicle sales rose to about 14 million last year from 11 million in 2024 and should rise further in 2026.
Much of the growth comes from China, long the world’s largest market for auto sales. Chinese automaker BYD surpassed Tesla as the world’s largest EV maker last year, and the gap is still widening.
According to the IEA, 55% of Chinese auto sales last year were some form of EV – either fully electric, plug-in hybrids or extended-range EVs with gasoline-powered generators to charge the battery.
Chinese EVs are also big business outside of the country. Exports are soaring globally, in Africa, Asia and South America as well as Europe, according to the IEA.
Competition from Chinese EVs
Chinese EVs have a major advantage over American or European autos – they are much less expensive.
More than 200 Chinese EV models sell for less than $25,000, according to Reuters, with some as cheap as $10,000. Compare that to the latest average price of new US EV at $56,377, according to Edmunds.
The Commerce Department recently ruled that Chinese cars can’t be legally sold in the US, even those built domestically, but experts think that will change someday.
US companies are still combatting growing competition from Chinese rivals in Europe and elsewhere.
In December, Ford announced a partnership with European automaker Renault to develop a small, cheap EV to be sold in Europe but not, as of yet, the United States.
“We know we’re in a fight for our lives in our industry,” Ford CEO Jim Farley told reporters.
The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
