The electric vehicle (EV) sector is currently experiencing a pivotal moment, with shifting dynamics in sales, incentives, and inventory. While recent figures showed a slight decrease in sales, experts anticipate a substantial surge in demand as the expiration of government-backed incentives approaches. This period offers unique opportunities for consumers, with dealers presenting attractive deals on new EVs amidst rising inventory. Simultaneously, the pre-owned EV market demonstrates resilience, with specific models maintaining strong demand due to their affordability. This evolving landscape is setting the stage for a more mature, market-driven EV ecosystem, transitioning away from reliance on subsidies.
Recent data from June revealed a 1.4% decline in electric vehicle sales, marking only the third such decrease on record, indicating a developing maturity within the market. This coincided with significant policy adjustments, including the scheduled termination of the federal EV tax credit—offering up to $7,500 for new vehicles and $4,000 for used ones—on September 30, 2025. Further contributing to this perception of diminishing demand were decisions to halt funding for EV charging infrastructure and revoke targets for EV market share by 2030. Despite these headwinds, the EV market share actually expanded to 8% in June, up from 6.9% in May, with a record 607,089 EVs sold in the first half of 2025, representing a 1.5% year-over-year increase, as reported by Cox Automotive.
This downturn in sales occurred despite unprecedented incentive levels, with average EV incentives reaching nearly $8,500—14.8% of the vehicle's price—in June. This figure is more than double the incentives offered for traditional gasoline-powered vehicles, with the average transaction price for a new EV at $56,910. The conclusion of these governmental tax breaks, coupled with the elimination of the 'leasing loophole' that previously boosted eligible sales, is predicted to ignite a buying frenzy in the coming weeks. Cox Automotive now forecasts that the EV market share will reach 8.5% by the end of the year, a slight revision from its earlier projection of 10%.
The current environment, marked by the impending end of federal subsidies, is expected to motivate prospective buyers to finalize their EV purchases swiftly. This urgency is compounded by the ample availability of new electric vehicles. Cox Automotive indicates that the supply of EVs in dealerships reached 125 days in June, an increase of 9.9% month-over-month. Although this is 14.8% lower than the same period last year, it marks the third consecutive month where EV inventory has surpassed that of internal combustion engine vehicles by over 30 days, far exceeding the ideal 60-day supply. This surplus has led to compelling offers, such as 0% financing for 60 months on the Chevrolet Equinox EV, which, after the federal tax credit, could start at $27,495. Similarly, the Subaru Solterra EV is available for lease at $299 per month for 36 months with a minimal down payment, and the Honda Prologue EV also offers 0% financing and eligibility for the full federal tax credit.
In stark contrast to the new vehicle market, the supply of used EVs remains constrained, with an average supply of just 41 days. This tightness is partly attributed to the $4,000 federal tax credit available for pre-owned electric vehicles. Notably, Tesla leads the used EV segment with the lowest supply at 33 days, while GMC has the highest at 74 days. Affordability plays a crucial role in the used market's appeal, with 43% of used EVs sold priced under $25,000. Popular models like the Tesla Model 3 and Model Y, with average prices of $22,998 and $29,111 respectively, are driving these sales figures.
The phasing out of the federal EV tax credit under the Inflation Reduction Act by the end of September is set to create a dynamic shift in the electric vehicle market. This transition will likely result in a temporary boost in sales as consumers rush to take advantage of remaining incentives. This period also signifies a critical evolution, moving the market towards demand-driven growth rather than incentive-led expansion. The focus will increasingly be on accessible EV options, such as the Chevrolet Equinox EV and Nissan Leaf. The future trajectory of EV adoption in the U.S. remains to be seen, especially as global markets, particularly China, continue their aggressive push towards electrification, potentially positioning the American market as an anomaly in the global automotive landscape if tariffs and disappearing incentives dampen local demand.