by Sharp Decline in US Electric Vehicle Sales
Electric vehicle sales in the United States have suffered a significant blow following the expiration of federal tax credits. Key points:
Impact of Subsidy Cancellation
The cancellation of the $7,500 government subsidies has significantly impacted the attractiveness of electric vehicles to consumers. Research firm J.D. Power in collaboration with GlobalData forecasts that only 54,673 electric vehicles were sold in October, which is 43.1% less than in October 2024, when 96,085 electric vehicles were sold.
The automotive industry is undergoing a significant realignment in the electric vehicle segment. The recent market correction for electric vehicles underscores an important lesson: consumers prefer to have access to a wide choice of powertrains.
Sales Statistics
A thorough analysis of the data shows that total new vehicle sales in the US in October amounted to 1,249,826 units, which is 6.9% lower than the figures for October 2024. The seasonally adjusted annual rate (SAAR) of sales was 15.1 million units for total sales and 12.7 million units for retail sales.
Manufacturers’ Response
Many automakers, including Hyundai, General Motors, and Tesla, have taken measures to mitigate the consequences of losing federal tax credits. They have implemented reductions in the total cost, launched new more affordable models, and other initiatives that helped avoid an even greater decline in sales.
Pricing Trends
An interesting finding is that average transaction prices continue to rise simultaneously with the decline in the electric vehicle share. The typical new car sold in October cost an average of $46,057, which is approximately $1,000 higher than last year. At the same time, incentive spending decreased to $2,674 per vehicle.
Market Outlook
Automotive executives are confident that the electric vehicle market will stabilize and continue to grow over time. Both the current and former CEOs of Ford recently agreed with this viewpoint. Analysts note that the reduction in incentives is largely related to fewer sales of electric vehicles, which typically have significantly larger discounts.
Average discounts on electric vehicles increased to $13,161 as brands tried to compensate for lost tax credits, while discounts on non-electric vehicles fell to $2,423, contributing to an increase in overall profitability despite soft demand for electric vehicles. This pricing dynamic reflects a complex transitional period for the automotive industry, as manufacturers balance stimulating demand with maintaining profitability in changing market conditions.
