With demand slipping and inventory still on the ground, the industry must navigate a bumpy ride toward an electric future.
It’s neither a secret nor a surprise: EV sales are diving after the $7,500 federal tax credit expired. The July 4 signing of the “One Big Beautiful Bill” sparked a temporary EV boom ahead of the September 30 cutoff—but movement has dropped sharply in the early days of the post-credit era.
To put some numbers behind it, the period after the bill’s passing resulted in a 44% increase in average daily retail vehicle movement as consumers rushed to take advantage of the expiring incentive. But after the rush, levels have dropped by 55% from the recent interim period, and by 36% compared to the weeks before the bill was passed.
BUT…
There are still many reasons that the long arc of electric vehicles, while slowed in the current political climate, will still bend towards reality. Consider these factors:
- Despite recent reductions, OEMs still have significant EV supply positions to sell in today’s marketplace. Ford, General Motors, and Hyundai have the most active inventory, but other makes have EVs on hand as well. All told, there are 75,000 EVs on dealer lots or in-transit to them that will still need to find buyers.
- EVs can be viewed through a half-full or half-empty lens. While EV sales will inevitably fall, there will still be investment, production, and sales in that market sector. Ford, for example, expects their EV sales to be cut in half going forward, which obviously takes a big bite out of their near-term plans. But Ford has also expressed grave concerns about ceding global EV dominance to BYD and other Chinese companies, so exiting the EV market is not an option.
- In the non-retail market, Tesla is not taking the tax credit expiration lying down. Its introduction of a standard-level Model Y vehicle priced below $40,000 is intended to combat the incentive expiration, and sends a signal to other EV manufacturers that they intend to fight to maintain their leadership in the U.S. market.
The EV dip is real—but so is the long game. Incentives may come and go with political winds, but the global momentum, regulatory pressure abroad, and sheer market potential of EVs ensure this is no passing phase. The industry can’t afford to treat this slowdown as an endpoint. It’s a recalibration—and one that smart players will use to double down, not check out.