Electric vehicles are having a brutal stretch in the United States. Their share of the new-car market hit a record near 12% last September, right before a $7,500 federal EV incentive went away. By January that share had fallen to 6%, and Cox Automotive figures show sales dropped by a further 20% that month compared with December.
Policies from the Trump administration are doing a lot of the damage. Washington scrapped an earlier rule pushing EVs to half of new car sales by 2030, and regulators loosened fuel economy requirements from over 50 miles per gallon down to roughly 34.5.
California also lost its bid to ban new gas-vehicle sales starting in 2035. A court did restore billions in blocked charging-station funding this past August, but AlixPartners’ global automotive market lead Mark Wakefield said the overall direction has clearly tilted back toward conventional engines.
Automakers are scrambling to adjust to a reality of limited policy support. Wakefield said the size of recent write-downs, tied to shelved battery plants and cancelled vehicle programs, caught even seasoned analysts off guard.
Cox Automotive’s Stephanie Valdez Streaty expects 2026 to land essentially flat, even as more than 22 new EV models reach showrooms this year after years of development work.
Buyers are also feeling squeezed now that they have to pay full price for electric cars that are, on average, more expensive than comparable ICE cars. JD Power’s vice president of data and analytics Tyson Jominy said average EV transaction prices have jumped roughly $8,000 since last autumn, discounts have gotten harder to find, and shrinking production has left shoppers with fewer models to pick from.
Companies without a gas-powered lineup to fall back on, like Tesla, Lucid, and Rivian, are catching the worst of it. Tesla has responded by dangling zero-percent loan offers on its Model Y just to keep buyers walking in the door.
Some automakers are leaning back into familiar territory as a result. Jominy pointed to Stellantis as an example of a brand doubling down on V8 engines for customers who never lost their taste for raw power, while Wakefield expects a broader shift toward bigger, less complicated engines across the industry.
Ford and GM aren’t abandoning electrification entirely, though: both companies remain committed to hybrids, and Ford has a compact electric pickup in the pipeline for 2028 expected to start around $30,000.
The EV situation still isn’t completely hopeless, however. Valdez Streaty flagged Rivian’s upcoming R2 as a potential bright spot near $45,000, noting that roughly two-thirds of EV models today still cost above $60,000, which keeps affordability the industry’s biggest obstacle.
Jominy struck a more hopeful long-term note: charging networks keep expanding, a growing share of vehicles now use the NACS plug that’s become the de facto standard, and with most EVs already covering over 300 miles per charge, he argued that range worries are largely behind the industry, even if prices still have some catching up to do.
For brands like Ferrari N.V. (NYSE: RACE) that target a niche market at the high end of the auto industry, the affordability issues caused by federal policy reversals are unlikely to be such a big concern since their target clients rarely consider cost when making a vehicle purchase.
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