One Year After the EV Tax Credit Ended, Hybrid Sales Surge While EV Market Stabilizes at Lower Levels
The federal EV tax credit, worth up to $7,500 on new vehicles and $4,000 on used ones, expired on September 30, 2025, after Congress eliminated it as part of the One Big Beautiful Bill Act. EV sales peaked at 11.4% of new car sales in September 2025 during a buying rush, then fell sharply — dropping 36% year-over-year in late 2025 and 27% in the first quarter of 2026, according to data from Cox Automotive and Edmunds. By mid-2026, EV market share has stabilized at roughly 5–6% of new car sales, while hybrid vehicle sales have risen nearly 27% over the past year.
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The end of the federal EV tax credit one year ago produced a predictable short-term drop in electric vehicle purchases, followed by a more modest stabilization that industry analysts say defied some of the worst-case projections. Ivan Drury, director of insights at Edmunds, described the current trajectory as "clearly nothing like what it was previously, but it has not fallen off of a cliff, which is what some people's predictions would've been."
The immediate aftermath was severe. At the Toyota franchise in Massapequa, New York, general sales manager Sal Iqbal said the dealership "didn't sell another EV until mid-November" after September 30, 2025. Nationally, Edmunds data shows EV market share dropped from 11.4% in September 2025 to 5.8% the following month. Cox Automotive recorded a 36% year-over-year decline in EV sales in the final two quarters of 2025.
The story of 2026, however, has largely been the rise of the hybrid. Hybrid sales are up nearly 27% nationally over the past year, according to Edmunds. Iqbal described Toyota hybrids like the Sienna minivan and RAV4 SUV as nearly impossible to keep in stock, with an average 12-day supply — a figure Drury said is "basically sold out" by industry standards. Hyundai's hybrid sales rose 33% in August year-over-year, making up nearly 30% of its total monthly sales, while Kia's hybrid sales rose 99% in the same period. Drury said Toyota, with its hybrid-heavy lineup, has had its "'I told you so' moment many times over."