Why Are US EV Sales Declining?

The Shift in the U.S. Electric Vehicle Landscape

In 2017, Mary Barra, then CEO of General Motors (GM), made a bold commitment to transition the automaker toward zero emissions by 2030. Her message was clear: "No more gas. No more diesel. No more carbon emissions." This pledge set the stage for a broader industry shift, with other major automakers following suit.

Ford, for example, announced in 2018 its intention to nearly triple investments in electric and hybrid vehicles by 2022, planning to introduce 40 new models. However, this momentum has been disrupted by a series of challenges that have left the U.S. auto industry uncertain about its future in electric vehicles (EVs).

Challenges Facing the EV Industry

David Whiston, a senior analyst at Morningstar, noted that "penetration has stalled" in the EV market. This sentiment is echoed by recent developments, such as GM’s decision to incur a $1.6 billion loss due to scaling back its EV operations. The company cited weaker demand, which it attributed to recent policy changes, including the expiration of federal EV tax credits and relaxed emissions rules.

The federal EV tax credit, which had been a significant driver of EV sales since its inception in 2008, expired on September 30, 2025. This change marked a pivotal moment for the industry, as it removed a key incentive for consumers to purchase electric vehicles.

Impact on Major Projects

In Bécancour, Quebec, the planned expansion of a battery facility was put on hold. The Ultium CAM project, a partnership between GM and POSCO, faced delays after GM decided to pause the second phase of the initiative. This decision, described as a response to "evolving market dynamics," led to Vale SA scrapping plans for a nickel sulfate plant that would have supported the project.

This slowdown is evident in the data. Despite a record 40% surge in U.S. EV sales during the third quarter of 2025, driven by a rush to buy before the tax credit expiration, the overall growth trajectory has been curbed. Cox Automotive reported a 6.3% decline in new EV sales during the second quarter, highlighting the challenges facing the industry.

Affordability and Market Dynamics

Affordability remains a significant barrier. The average price of a new car surpassed $50,000 for the first time, with EVs costing approximately $7,000 more than traditional internal combustion engine (ICE) vehicles. This price gap has led to a shift in consumer behavior, with many opting for used EVs over newer models.

RBC Capital Markets highlighted that the EV slowdown is largely due to the wide price gap between new and used EVs. Tom Narayan, lead equity analyst for Global Autos at RBC, pointed out that used BEVs are now priced around $30,000, making them comparable to used ICE cars. This trend has shifted consumer preferences away from new EVs.

Regulatory and Infrastructure Challenges

Regulatory uncertainty and the lack of public charging infrastructure are also contributing to the slowdown. EY’s Mobility Lens Forecaster model predicts that the timeline to reach 50% EV adoption in the U.S. will be delayed until 2039, five years later than previously forecasted.

Unlike the U.S., Europe and China continue to see steady growth in EV adoption. Regulatory mandates in Europe require a certain share of EV sales, while China leads the global EV race with a significant cost advantage in battery production and higher market penetration rates.

Global Trends and Future Outlook

Despite the challenges in the U.S., global EV sales reached a record 2.1 million in September 2025, with China accounting for 1.3 million of those sales. This highlights the ongoing momentum in other markets, even as the U.S. grapples with its own hurdles.

The future of the U.S. EV market remains uncertain, with factors such as policy changes, affordability, and infrastructure playing critical roles. As the industry navigates these challenges, the path to widespread EV adoption may take longer than initially anticipated.