The massive tax and spending cut bill that President Donald Trump signed last week ends federal tax incentives for electric vehicles.
Buyers have until Sept. 30 to qualify for the federal tax credits on EVs before they are terminated, but experts say there are still strong financial reasons to consider buying the vehicles even without those incentives.
Before the bill passed, new electric vehicles came with a $7,500 federal tax credit, and used EVs included up to $4,000. Those incentives were originally designed to help make the vehicles more affordable.
According to the latest data from Kelley Blue Book, the average purchase price of a new EV is about $9,000 higher in the United States than the average new gas-powered car. Used EVs on average cost $2,000 more than comparable gas cars.
Those credits, paired with other incentives in many states, helped bridge that price gap. Without them, Senior Policy Director Ingrid Malmgren of the nonprofit advocacy group Plug In America said they will become unaffordable to many lower- and middle-income Americans.
People are also reading…
"That's really disappointing because聽鈥 they're just a really great way to reduce transportation energy cost burden," Malmgren said.
The up-front cost of an electric vehicle might be higher, but for those who can afford to consider the lifetime fuel and maintenance savings, Malmgren said the EV is still a good financial and environmental move in every state.
An electric vehicle charges May 22聽at an Electrify America station in Arcadia, Calif.
Long-term costs
That is because electric vehicles might not be cheaper to buy, but they are cheaper to drive. Malmgren said that even without the federal tax credits, an electric vehicle owner would still come out ahead.
"Quickly you'll end up paying less than a gas car because it costs much less to fuel, and it needs almost nothing for maintenance," Malmgren said.
Malmgren said the point at which an EV driver's savings on fuel and maintenance outweigh the higher initial price varies. It depends on the kind of car and how often they are driven, as well as the cost of gasoline and electricity in an area.
She said EV owners pay less in upkeep because the cars typically have fewer moving parts to maintain and require less frequent servicing. There are calculators online that pinpoint that moment based on some of those criteria.
A 2020 study in the academic journal Joule found that the average EV in the U.S. charged with a typical mix of public and private chargers saves the driver $7,700 in fuel costs over a 15-year life span, compared to filling a car with gas.
Savings vary by state. The study found that someone charging a car at home during off-peak hours, deemed as a best-case scenario, could save more than $14,000 over 15 years in Washington, where electricity is relatively affordable. The study said that an EV driver in any state exhibiting typical driving and charging behavior would save money on fuel costs. The study did not account for the car's purchase price, its maintenance cost or associated tax credits.
Janelle Lowe prepares to charge her electric vehicle at a station May 22 in Long Beach, Calif.聽
EVs are cleaner
Manufacturing an electric vehicle typically creates more pollution than making a traditional gas-powered one. But experts say that driving an EV over the long term is still less polluting than a gas car.
Once they both drive about 15,000 miles 鈥 slightly more than the average American drives in a year 鈥 the total pollution that has gone into making and driving each type of car has evened out, said Peter Slowik, U.S. Passenger Vehicles Lead for the International Council on Clean Transportation.
Every mile after that widens the gap between the cleaner electric car and the more pollutive gas car. By the end of the car's life, emissions caused by the average EV are about half the average gas car, according to the U.S. Department of Energy.
So unless you buy a new car each year, the EV is the cleaner choice, he said.
"They are a no-brainer," Slowik said. "Electric vehicles are already inherently so much more efficient."
A 2023 analysis by Yale Climate Connections found that electric vehicles are responsible for less carbon dioxide pollution even in areas where the electricity used to charge them comes from coal. An EV in West Virginia, which is one of the most coal-reliant states, still pollutes 31% less than an equivalent gas-powered car, according to the analysis.
Slowik said that's because electric cars are better at translating energy into forward motion. For example, the most popular EVs in the U.S., the Tesla Model Y and the Tesla Model 3, can drive more than 100 miles on energy equivalent to what is provided by a gallon of gasoline.
"If you compare that to a 25-mpg gasoline vehicle, that's already four to five times more efficient," Slowik said.
Electric and hybrid cars could hit 25% market share in the U.S. within two years
Electric and hybrid cars could hit 25% market share in the U.S. within two years
Last year was another record-breaking year for electric vehicles, with sales passing 1.2 million. EV sales could merely hold steady in 2025 because new vehicle prices are likely to increase due to tariffs on imported vehicles and parts and the possible rollback of federal EV incentives. Still, many automotive research firms expect EV sales to steadily grow into the 2030s. Below, assesses past and current EV sales based on data it has collected. The analysis also includes hybrid and plug-in hybrid sales, as well as future EV sales projections.
EV sales in the U.S. grew last year but could stall in 2025
In 2022, 713,145 EVs were sold, and that ballooned to a little over 1 million sales in 2023. EV sales increased again to 1.2 million in 2024, a gain that wasn't as high as expected. As of February of this year, 185,992 EVs have been sold. At this rate, EV sales might not grow this year. Since 2015, EV sales have increased every year and are significantly higher than the 389,410 sold just four years ago in 2021.
The market share鈥攐r the percentage of new vehicle sales鈥攆or EVs increased from 6.9% in 2023 to 7.7%in 2024. As of February, the EV market share is up slightly to 7.9%. In stark comparison, the EV market share was a paltry 0.3% in 2015, when the Nissan Leaf and Tesla Model S were two of the few electric options available.
Hybrid sales are surging, outpacing EV sales聽
There's a reason why many automakers are putting the brakes on their EV rollouts and have pivoted to increasing hybrid production: Hybrid sales are booming. Last year, 313,531 more hybrids were sold than EVs. Through February of this year, 273,479 have been sold, which puts them on track to beat last year's sales. Hybrids will almost undoubtedly outsell EVs again this year.聽
Hybrid sales had their biggest surge from 2022 to 2023, increasing from 754,722 to a whopping 1,242,608. Last year, sales jumped to 1,546,989, which put the hybrid market share at 9.7%. Market share through February of this year is notably higher at 11.7%. Hybrid market share was 5% in 2021 and only 1.8% in 2015. Edmunds predicts hybrid sales will continue to increase for the next several years.聽聽
Plug-in hybrids鈥攁lso called plug-in hybrid electric vehicles or PHEVs鈥攑rovide an electric driving range before they switch to operating like a regular hybrid when the battery runs low. Although sales are significantly lower than those of EVs and regular hybrids, 288,126 plug-ins were sold last year, the most ever. That's up from the 177K sold in 2023, the biggest year-over-year increase so far. The market share was only 1.8% last year and has so far stayed the same as of February. Plug-in hybrid market share was only 0.5% in 2021.
Total EV, hybrid and plug-in hybrid sales聽
The combined sales of EVs, hybrids and plug-in hybrids reached a little over 3 million in 2024, making up 19.2% of the market share. That's up from 2.5 million sales and 16% market share in 2023. Through February of this year, the market share has increased to 21.4% with 501,048 units sold. Sales of these three types of vehicles could hit 25% market share within the next two years.
ICE vehicle sales continue to dominate, but their market share is shrinking聽
Almost 13 million internal combustion engine vehicles, or ICE vehicles, were sold last year, constituting an overwhelming 80.8% of the market share. That's down from the 84% market share in 2023.Their market share decreased again to 78.6% through February of this year, with sales totaling 1.8 million. The market share for ICE vehicles was 91.8% in 2021 and has dropped every year since 2015. Edmund's expects the market share of gas-engine vehicle sales to continue to drop as the popularity of EVs, hybrids and plug-in hybrids increases.
EV sales are projected to grow over the next several years聽
With tariffs expected to increase vehicle prices and reduce sales, along with the likely repeal of federal EV incentives, many automotive research and consulting companies have had to adjust their EV sales projections. Even so, EV sales are predicted to grow by 2030 and beyond. A recent report by forecasts that EV sales in the U.S. will hold at 1.2 million sales this year, but it predicts that the EV market share will hit 26% by 2030.
The , an automotive data and analytics company, released a recent report that says EVs will reach a market share of 39.2% in the U.S. and Canada by 2030. In 2035, the company projects that the EV share will increase to 70.7%. Based on what happens during the Trump administration, these predictions will likely continue to be adjusted.
was produced by and reviewed and distributed by Stacker.
