Buckle Up for a ‘Weird Moment’ in the U.S. Electric Vehicle Market, Even as Global Sales Have Soared

EV sales slowed in the United States in 2024 and Donald Trump may further disrupt the industry by cutting incentives

The auto industry saw a slowdown in growth of U.S. electric vehicle sales in 2024, largely due to the longtime leader—Tesla—losing ground.

How things go in 2025 will depend a lot on what happens in Washington, where the incoming Trump administration has set its sights on repealing or revising incentives for EVs.

But the long-term trajectory has changed little, as the world continues to shift from gasoline engines to electric motors, a transition whose technological and economic progress is too strong to be undone by any one country or leader, according to analysts. The biggest uncertainty is the pace.

In 2024, U.S. consumers bought 1.3 million EVs, an increase of 7.3 percent from the prior year, according to Kelley Blue Book and Cox Automotive. The figures do not include hybrids.

EV market share was 8.1 percent of sales of U.S. cars and light trucks, an increase of 0.3 percent.

“Growth slowed,” said Sean Tucker, lead editor for Kelley Blue Book. “But that’s a complicated two-word sentence, because growth did not stop at any point. It slowed down.”

The main thing hurting sales was “Tesla’s shrinkage problem,” he said, describing the company’s declining numbers. Tesla remained the country’s EV leader by a long stretch, but its sales of 633,762 vehicles were down 5.6 percent from the prior year.

Tesla’s problems included a vehicle lineup whose top sellers haven’t had major updates in a while. The newly introduced Cybertruck had decent numbers, with 38,965 vehicles sold, more than any other electric truck. But those gains were cancelled out by declining sales for the brand’s top two models, the Model Y and Model 3.

Other automakers filled the gap, including Ford, which was runner-up to Tesla with sales of 97,865 EVs, an increase of 34.8 percent. Kia, Honda and Cadillac were among the many other automakers that posted large percentage increases in EV sales.

Among the notable new models in 2024 were the Cybertruck, Chevrolet Equinox EV and Honda Prologue.

Global EV sales grew at a much more rapid rate, with 17.1 million vehicles sold in 2024, an increase of 25 percent, according to Rho Motion, a United Kingdom-based research firm. Those figures include plug-in hybrids.

China led the way with 11 million vehicles sold, an increase of 40 percent. Europe was down, with 3 million units sold, a decrease of 3 percent, due in part to the reduction or elimination of some incentives for buying EVs. The United States and Canada had combined sales of 1.8 million, up 9 percent.

“What is clear is that government carrots and sticks are working,” said Charles Lester, Rho Motion’s data manager, in a statement.

He was referring to incentives, such as the tax credit of up to $7,500 for buyers of some plug-in vehicles in the United States. The incentives help to make EVs more affordable, canceling out much of the price difference between electric models and equivalent ones that run on gasoline.

Fewer vehicles qualify for the U.S. credit in 2025 than in 2024 due to rising standards to qualify under the Inflation Reduction Act. Automakers need to meet standards designed to encourage assembly of vehicles and batteries in the United States and the use of battery components from the United States and its allies.

There are now 23 vehicles that qualify for the $7,500 credit, a decrease from 49 vehicles that had the full or partial credit at the end of 2024. The Tesla Model Y and Honda Prologue are among the leading models that still qualify.

Rivian and Volkswagen are among the automakers that qualified before but don’t now. But this could change if the companies make changes to meet the standards.

The tax credits are for people buying the vehicles. The rules are different for EV leases, with automakers able to get the $7,500 credit with few limits on qualifying. Most automakers use the credits from EV leases to reduce the costs of the lease.

The upshot for consumers is that they can get the equivalent of the credit by leasing a model that wouldn’t be eligible for the credit if it was purchased.

The tax credits, whether for leased or purchased EVs, are some of the many incentives and policies that may go away or be severely altered by the Trump administration. But because there is no certainty about what may happen, analysts aren’t sure what to recommend to customers.

“It’s always been difficult to predict the future, but we’re especially headed into some uncertainty now,” said Moaz Uddin, senior EV policy specialist for the Great Plains Institute, a Minneapolis-based nonprofit that does research and advocacy to support a transition to carbon-free energy.

But forecasters are making their best guesses. BloombergNEF analysts expect EV sales in the United States to be “up moderately” in 2025, according to a report for clients issued on Jan. 13. This reflects a belief that the Trump administration will need to take some time to go through the process of repealing the EV tax credit.

Chris Harto, a senior policy analyst for Consumer Reports, said it’s a challenging time for people trying to decide when to buy an EV. He advises against panic buying out of fear of tax credits going away, but thinks it’s a good time to buy for people who have done enough homework to have a good idea of what vehicle will meet their needs.

“This is definitely a weird moment,” he said.

While a lot could change in the short term, Harto sees little change in the long-term trajectory. He is one of many analysts who view the shift to EVs as inevitable.

“The technology is moving in such a direction that there’s almost nothing that can be done to stop there from being more affordable EVs on the market,” he said.

Automakers that want to compete globally will need to have strong EV lineups or they will cede the market to China, he said. The companies’ immediate challenge will be to survive this period in which the transition to EVs is expensive and U.S. policies are far from certain.

“The next year or two is really hard for me to predict,” he said. “I think it’s going to be really hard for anybody to predict.”

Cover photo: Workers prepare new Tesla cars for delivery at the company’s Fremont Factory in California on April 24, 2024. Credit: Justin Sullivan/Getty Images