The next big test for the EV industry begins this week.
Starting Wednesday, U.S. consumers can no longer use a $7,500 tax credit from the federal government to help buy an electric vehicle. The Biden-era incentive is now gone — swept away in the Trump administration’s purge of climate and clean energy programs.
While it lasted, the tax credit juiced domestic EV sales. Before the incentive took effect at the end of 2022, EVs accounted for 6 percent of new U.S. car sales. Now the figure is closer to 10 percent, aided in part by a last-minute rush of buyers trying to take advantage of the funding before it disappeared.
Analysts expect EV sales to decline dramatically in October now that the tax credit and other pro-EV policies are gone. How far sales drop — both this month and in the years ahead — will speak volumes about whether former President Joe Biden did enough to prime the U.S. electric vehicle industry to stand on its own.
“We are going to get, in this Trump administration, a test of whether this technology — EVs and the infrastructure to go with it — really has a momentum of its own,” said Barry Rabe, a professor of environmental policy at the University of Michigan.
The tax credit had been around in one form or another for more than a decade when Biden took office. Congress extended it to $7,500 as part of the Inflation Reduction Act, and also restricted it to U.S.-made vehicles assembled from U.S.-made batteries.
But it was only one piece of Biden’s broader push to grow America’s EV industry.
The Inflation Reduction Act also created tax credits for leasing EVs and buying used models. Those tax credits essentially became a discount on each vehicle’s sticker price, since the customers and dealers could apply them at the point of sale.
Other tax credits, loans and direct financial support funneled billions of dollars to help carmakers build mines and factories for the new industry.
Separately, Biden set a goal of building 500,000 EV chargers nationwide. To aid that effort, Congress established a $5 billion federal program to create a national network of high-speed EV chargers.
EPA and the Transportation Department also passed strict regulations on tailpipe pollution during the Biden years that were intended to push carmakers to build EVs. And the administration supported even stricter rules in California and other states that would have phased out most gas-powered cars by the mid-2030s.
It was an across-the-board strategy designed to reduce greenhouse gas emissions from the transportation sector and give America’s EV industry a chance to compete internationally.
Yet despite the efforts, many analysts say the country never got to see the law’s full impact.
Many aspects of the law took months or longer to put into place, and the overarching goal of Biden’s EV efforts — to get more U.S. drivers into electric cars — requires more than one presidential term to execute, as carmakers need years to design new cars, build new factories and convince consumers to buy EVs, observers said.
“You saw a lot of manufacturers announce that they were building EV facilities and battery manufacturing sites in the US., and those only really started to get finalized over the last year,” said Corey Cantor, research director at the Zero Emission Transportation Association.
Consumers concerned with price, ‘range anxiety’
After Biden signed the IRA in 2022, it took the Treasury Department eight months to publish its first list of vehicles that qualified for the program. And the law’s rules on Chinese-made batteries and materials were so complicated that the list continued to change every few months.
The law also prompted furious pushback from Republicans, backed by the oil industry and then-candidate Donald Trump. A year after the IRA took effect, Ford CEO Jim Farley lamented the “politicization” of EVs.
Electric vehicles “have become a political football and that’s a shame,” he said in 2023.
The opposition took a toll — both politically and with car buyers.
Working with a Republican-led Congress this year, President Donald Trump was able to disassemble most of what he called the “EV mandate” in a matter of months.
And among consumers, the number of drivers considering an electric car or truck dropped to 16 percent this year, down from 25 percent in 2022, according to AAA. Drivers remained concerned about the high up-front cost of the new vehicles as well as the lack of available chargers, the poll showed.
Biden spoke to the “range anxiety” of prospective EV drivers by vowing during the 2020 presidential campaign to build a half-million new charging stations by the end of 2030. He reiterated that goal while in office.
But his administration only got partway to that mark. As of this week, about 228,000 charging ports have been installed at 76,000 locations in the United States — most of them by the private sector, according to the Department of Energy.
Meanwhile, the $5 billion federal program to help with the problem has done little. Though it continues to operate under the Trump administration, it’s helped states open only about 90 charging sites with 402 individual ports.
At the same time, carmakers have yet to solve one of the industry’s biggest challenges — the yawning gap between the sticker price of EVs and conventional cars.
In July, the average cost of an EV was $57,245 while the average cost of an internal-combustion vehicles was $48,179, according to Cox Automotive. The gap is smaller than it was in 2021, but that’s still a significant $9,000 difference.
Some of the price difference is unavoidable, given the cost of batteries. But auto companies also focused on building luxury-model EVs to boost their bottom lines, analysts said.
EV advocates have argued that the cars are cheaper over the long run because of their lower fuel and maintenance cost.
But “the sticker price is still higher,” Cantor said. “So unless you can explain that nuance up front, people may not necessarily … understand why it might make more economic sense in the long run to get an EV.”
One bright spot for the EV market has been an increase in the choices available.
There’s now a wide variety of EV and hybrid models for U.S. consumers to choose from — a trend driven by a mix of market forces, Biden administration policies and the rightward shift of Tesla CEO Elon Musk, which has turned off many prospective Tesla buyers.
At the end of 2022, Tesla sold 58 percent of the EVs in the United States; that number fell to 46 percent in the middle of 2025.
Hybrid sales have grown even faster than fully electric vehicles, making up 13 percent of new-vehicle sales as of mid-year.
While they still burn gasoline, hybrids are far more fuel-efficient than conventional cars and trucks. Experts have said they could help reduce pollution in the interim as the industry continues to electrify.
There are now more than 100 electric and plug-in hybrid models on the market, and many of them sell for $29,000 to $35,000, putting them closer to matching the price of gas-powered cars.
The cost of batteries is dropping too, as carmakers started building them in bulk and researchers are finding new ways to pack more energy into smaller, lighter batteries.
Those trends will help drive electric vehicle sales even after the government support ends, said Genevieve Cullen, president of the Electric Drive Transportation Association. And despite all the negative publicity about EVs, drivers tend to like them once they try them, and they’re attracted by the lower cost of fuel and maintenance.
“People saying words is not the same as people getting in the car and saying, ‘This works,’ ” she said.
America vs. the world
Whether the industry can maintain momentum is unclear.
Since the IRA was enacted, carmakers have invested $67.5 billion in battery plants and $14.2 billion in EV factories, according to the Alliance for Automotive Innovation.
But the end of the tax credits will put a damper on that industrial growth. The nonprofit group Energy Innovation estimates EVs will make up about 30 percent of car sales by 2030 — instead of 40 percent.
Other forecasts are even lower.
If slower growth comes to pass, as much as 100 percent of the planned expansion of assembly plants would become unnecessary, along with half of the existing plants, according to research from Princeton University. And between 29 percent and 72 percent of battery factories would be in the same predicament.
Already, some U.S. carmakers have announced plans to ramp up production of gas-powered cars and trucks, which are more profitable, and slow down their shift to electric vehicles.
Carmakers still expect the transition will happen, but they say they can’t build electric vehicles faster than consumers will buy them.
Farley, the Ford CEO, said he expects the reversal of federal EV policy will cut in half sales of electric vehicles, Bloomberg reported.
“I wouldn’t be surprised if EV sales in the U.S. go down to 5 percent,” he said Tuesday in a speech in Detroit. The EV market will be “way smaller than we thought.”
With fewer EVs on the road, American drivers will be stuck driving gasoline-powered cars for longer, which will lead to more air pollution and could also lead to higher prices for drivers, said Shannon Baker-Branstetter at the Center for American Progress.
Gasoline prices have been relatively low, but “if gas goes up again, it’ll leave U.S. consumers in a tight spot,” Baker-Branstetter said.
The tide could turn eventually.
California and other states likely will look for other ways to cut air pollution and promote electric transportation — although they may not be able to do it until Trump leaves office, said Robbie Orvis, an analyst Energy Innovation.
And American car companies are watching closely as the rest of the world goes electric. EVs are projected to make up a fourth of car sales worldwide in 2025, according to the International Energy Agency, and Chinese makers now dominate the industry.
American automakers find themselves in a bind. They want to sell cars in China, Europe and other regions that are rapidly converting to electric vehicles, but their home market is tepid. They’ll need to figure out how to make Americans fall for EVs without a government sweetener.
“They can’t really take their foot off the pedal when it comes to building out new models,” Orvis said, “because they will increasingly be pushed out of the international market.”
This story also appears in Energywire.
