On Sept. 30, 2025, the federal Clean Vehicle credit expired as part of the One Big Beautiful Bill, taking away the $7,500 incentive for new EV purchases and leases and up to $4,000 on qualifying used EVs.
A year later, dealers and consumers are adjusting to the new market without the added incentives.
Driving the news: Ahead of the tax credit's expiration, EV sales picked up in the third quarter of 2025, with Cox Automotive data putting sales at 437,000 and a 10% share.
JD Power’s research put the third quarter 2025 EV share closer to 15%.
Cox Automotive and JD Power data expectedly showed sales falling drastically in the fourth quarter of 2025 to around a 5% share.
New market: New EV sales fell to near 216,000 in the first quarter of this year, according to Cox Automotive data, and rebounded to 244,000 in the second quarter.
Days supply reached 180 days in early 2026 before falling to 78 days in August.
Cox Automotive Director of Industry Insights Stephanie Valdez Streaty in the Q3 Forecast noted the EV market has been “steadier,” with the third quarter expected to have 239,000 EV sales and nearly a 6% share.
“The market is starting to find that natural demand,” Valdez Streaty said. “Manufacturers have adjusted production to match that demand, and I think that’s also helping the market. You have some of the new products that are doing well.”
Price adjustments: Prices of new EVs dropped early in 2026, and, after a brief rebound, are on a downward trend again.
Cox Automotive put the average transaction price at $54,754 in August, and JD Power put it below $47,000.
The transaction price for EVs has dropped, while incentives on the powertrain have also decreased from almost $13,000 to less than $9,750, according to JD Power.
The “price premium” for EVs over ICE has narrowed, with Cox data showing a fall from 16.5% to 9.7%, with a difference of almost $5,000, and JD Power showing an even narrower gap of $1,100 in September.
“There were several times in 2024 and 2025 when EV transaction prices fell below ICE due to the high incentives (both OEM-funded and the federal tax credit),” said Tyson Jominy, SVP, OEM Customer Success at JD Power, to CDG News. “Then, it’s easy to see when we were blowing out EVs last year in Q3 and then the really large runup in transaction prices in Q4. Then something funny happened – EVs are suddenly competitive again with price. The federal tax credit is gone, and automakers are spending fewer incentive dollars, but the mix of EVs that we’re now selling is much more affordable vehicles and segments… I think it’s a super cool story that no one is talking about – the distortion in price created by federal policy that is now very quickly being replaced with competitive vehicles.”
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Demand grows across used market: The used EV market has seen an increase in sales and inventory in the past year.
Cox data shows used EV sales have increased from 111,702 in mid-2025 to 126,589 by the third quarter of this year.
Days' supply has grown from 36 to 42 during that time as the number of EVs for sale has grown from 42,000 to 55,000.
CarGurus shows the price of EVs has dropped 5% year over year to $35,700, though it has climbed 4.1% since January.
The Tesla Model 3 leads used EV sales at 16.3% of the market at an average price of $24,800.
“It’s an evolving and maturing market. There’s still a lot of runway for additional growth,” Kevin Roberts, Director, Economic and Market Intelligence for CarGurus, told CDG News. “We’re starting to see more of the off-lease EVs hit the market… Used EVs still represent the best bargain for consumer price points.”
Bottom line: A year after the EV credits ended, the market continues to evolve and change. Manufacturers have curtailed a chunk of EV production, and demand has flowed to hybrids, which have seen a 3% rise in share to 16% to 17%. But the EV market has defied some predictions and maintained a 6% to 8% share.
“Q2 and Q3, we really established the new baseline, and quite frankly, it’s not so bad,” Jominy said. “We’re running in about the 7% range for EV retail share. There were points earlier this year, April and May, when EV share this year was within a couple of tenths of where it was running last year… We’re getting demand levels back very similarly to a year ago. This is probably the new normal.”
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