U.S. EV Sales Drop Sharply After Federal Tax Credit Ends

According to figures from S&P Global Mobility cited by Automotive News, about 59,802 new electric vehicles were registered in January across the country. That represents a 41% decline compared with the same month a year earlier.

With total new-vehicle registrations at roughly 1.2 million, fully electric models accounted for just 5.1% of the market. A year earlier, EVs held a significantly stronger 8.3% share.

Meanwhile, more traditional powertrains quietly regained ground. Gasoline-powered vehicles increased their market share by 2.3 percentage points, reaching 76.6%. Hybrid models also gained momentum, rising 1 percentage point to 14.7%.

The EV segment is still dominated by Tesla. In January, the company registered 32,123 vehicles in the U.S. However, even Tesla felt the slowdown, with registrations falling 26% year over year.

Interestingly, Tesla’s share of the EV market actually grew by 11%, reaching 53.7%. That shift mainly reflects how much harder other manufacturers were hit by the market decline.

Second place in the EV rankings went to Cadillac, but with a massive gap—just 3,189 registrations, more than ten times fewer than Tesla. Still, Cadillac was one of the few brands to show growth, posting an 8.1% increase year over year. Its share of the EV segment climbed 2.3 percentage points to 5.3%.

Hyundai recorded 3,027 EV registrations, a 23% drop compared with last year. Much of the decline came from the Hyundai Ioniq 5, which fell 22% to 2,101 units.

Sales fell even more sharply for Ford, which saw EV registrations plunge 67% to 2,772 vehicles. Meanwhile, Chevrolet dropped 55% to 2,658 units.

Against this backdrop, Toyota looked like something of an outlier. The brand managed to post 25% growth, though total EV registrations were still relatively modest at 2,529 vehicles, leaving the company behind several competitors in overall volume.

Karl Brauer, executive analyst at iSeeCars, believes the market is entering a period of “natural filtering.” Without the “carrot” of federal incentives or the “stick” of emissions penalties, weaker players may struggle to compete.

Journalists at Automotive News note that year-over-year declines have been recorded every month since the tax credit ended. Meanwhile, Tom Libby describes the current situation as expected—a kind of market reset, after which EV sales will likely recover, but only gradually.