New federal data show electric vehicle sales dropped sharply in late 2025 following the end of tax incentives, while hybrids continued to gain favor among consumers and automakers.
By yourNEWS Media Newsroom
Sales of battery electric vehicles declined in 2025 while hybrid vehicles continued to expand their share of the U.S. auto market, according to a Feb. 9 statement from the Energy Information Administration.
The EIA attributed much of the late-year downturn in electric vehicle sales to the expiration of two federal incentive programs—the New Clean Vehicle Credit and the Qualified Commercial Clean Vehicle Credit—which ended on Sept. 30, 2025. Both programs were terminated under provisions of the One Big Beautiful Bill Act, signed into law by President Donald Trump in July 2025.
According to the agency, EV market share reached a record high just before the credits expired, accounting for roughly 12 percent of all light-duty vehicle sales in September. In the months that followed, EV sales fell sharply, with market share dropping to below 6 percent for the remainder of the year.
“About 22 percent of light-duty vehicles sold in 2025 in the United States were hybrid, battery electric, or plug-in hybrid vehicles, up from 20 percent in 2024,” the EIA said. “In the second half of 2025, battery electric vehicle sales increased before sharply declining in response to the expiration of tax credits at the end of September.”
While battery electric vehicles qualified for federal tax credits until late September, hybrid vehicles did not. As a result, the EIA said the end of the credits had little impact on hybrid sales, which continued to grow throughout the year.
The shift in consumer demand has been accompanied by changes in automaker strategies. In December, Ford announced it would take a $19.5 billion writedown after deciding to discontinue several electric vehicle models. The company said it plans to refocus on gasoline-powered and hybrid vehicles and expects to add thousands of workers to production lines tied to those models.
Ford also said it intends to replace the all-electric F-150 Lightning with an extended-range version that uses a gasoline engine to recharge the battery, while abandoning plans for fully electric trucks and vans.
Earlier this month, Stellantis announced it would record €22.2 billion (about $26 billion) in charges, citing an overestimation of the pace of the global transition to electric vehicles. Stellantis Chief Executive Antonio Filosa said the miscalculation had “distanced us from many car buyers’ real-world needs, means and desires.”
The company said its revised strategy will emphasize “freedom of choice” by expanding its lineup of hybrid and advanced internal combustion engine vehicles.
Electric vehicle leader Tesla also reported lower deliveries in 2025, with global deliveries totaling 1.64 million vehicles, down from 1.79 million in 2024.
International data show similar trends. The European Automobile Manufacturers’ Association reported that hybrid vehicles accounted for 34.5 percent of new car registrations in the European Union last year, making them the most popular choice among consumers. Battery electric vehicles represented 17.4 percent of EU market share in new registrations.
In the United States, overall EV sales were weaker in the fourth quarter but remained comparatively strong on an annual basis. Cox Automotive said total EV sales in 2025 were just under 1.3 million units, making it the second-best year on record for electric vehicle sales in the country.
Cox noted that broader vehicle sales in January were affected by harsh winter weather and economic pressures. Senior economist Charlie Chesbrough said the slowdown that began in late 2025 is expected to persist.
“The loss of EV tax credits at the end of Q3 led to fewer overall sales in Q4, and that will likely continue into the first quarter of 2026,” Chesbrough said. He added that ongoing concerns about the U.S. economy and high new-vehicle prices are expected to remain “major headwinds” for the auto market throughout 2026.
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