EV tax credit repeal reshapes U.S. auto market, boosting hybrids and hurting Detroit makers
The removal of the $7,500 federal electric-vehicle tax credit has lowered EV sales, lifted hybrid demand and created clear winners and losers among manufacturers.
President Donald Trump signed legislation on Sept. 30, 2025 that ended the $7,500 federal tax credit for electric-vehicle buyers. Since the credit’s removal, electric-vehicle sales have fallen, while demand for fuel-efficient hybrids has risen as gasoline prices climbed above $4 per gallon.
Cox Automotive reported that 12 million new cars were sold in the United States through the first nine months of 2026, a pace similar to 2025. However, only about 6 % of those sales were electric, down from nearly 10 % a year earlier. Used-vehicle EV transactions have shown modest growth.
Tesla remains the dominant EV seller, moving 242,100 electric cars in the first half of 2026, with the Model Y as its top model. The company’s early market entry and prior access to the tax credit have helped it retain more than half of the EVs on U.S. roads.
Hybrid-focused brands such as Toyota, Hyundai and Kia have benefited from the shift. Toyota recorded 21,855 EV sales, Hyundai 26,936 and Kia 12,627 in the same period, while their hybrid lineups attracted buyers seeking lower fuel costs.
Detroit automakers have seen a sharper decline. General Motors sold 56,679 EVs in the first half of 2026, down from over 78,000 the previous year when the credit was still available. > "I don't think it's shifted our mission. We still think EVs are the endgame," GM CEO Mary Barra said on Fortune's "Titans" podcast.
Ford’s EV volume fell to 16,606 units, and the company announced that its F-150 Lightning will be reconfigured as an extended-range electric vehicle rather than a fully electric model. > "Our new $30,000 Fathom electric pickup will be the most important car of the future," Ford CEO Jim Farley told USA TODAY in July 2026.
Volkswagen discontinued production of its U.S.-built ID.4 crossover after selling only 3,768 units in the first half of 2026, planning instead to introduce new models in European markets.
Overall, the repeal of the federal EV tax credit has accelerated a market pivot toward hybrids and placed manufacturers that had heavily invested in all-electric strategies at a disadvantage.