After years of rapid growth, the electric vehicle (EV) market in the United States is showing clear signs of cooling down. For the first time in at least ten years, EV registrations fell in 2025, dropping by 0.4% to 1.3 million units. While not a catastrophic collapse, this marks the first annual decline and suggests the earlier period of explosive growth is over.
The Impact of Policy Changes
The most dramatic shift occurred in December, with EV registrations plummeting 48% year-over-year to just 75,427 vehicles. This coincided with the expiration of the $7,500 federal EV tax credit. As a result, EVs’ share of the overall automotive market dropped sharply from 9.9% in December 2024 to 5.3% in December 2025.
Overall, EVs accounted for 7.8% of light vehicle registrations for the full year, a slight decrease from 8% in 2024. Meanwhile, total vehicle registrations rose by 2.2% to 16.25 million units, indicating that consumers continued to purchase cars—but increasingly opted for traditional gasoline-powered vehicles.
Underlying Trends and Concerns
The slowdown was not sudden; growth had already decelerated from triple-digit gains to 11% in 2024. The removal of the tax credit in July accelerated this trend, with a surge in purchases before the deadline followed by a sharp decline in the fourth quarter.
The primary issue remains price. Despite incentives, EVs generally remain more expensive than comparable gas-powered cars. Early adopters have largely been accounted for, and broader consumer adoption is hampered by concerns about charging infrastructure and range anxiety. Hybrid vehicles have emerged as a popular compromise.
Key Players Face Headwinds
Tesla, still the dominant EV manufacturer, experienced a 6.8% drop in registrations for the year, with its market share falling from 3.1% to 44.9%. While the Model Y remains the top seller, the Cybertruck and Model 3 both saw significant declines. Tesla faces further challenges as it plans to discontinue the Model S and X and has shelved plans for a smaller, more affordable model.
Ford suffered an even steeper December decline of 61%, while Cadillac saw a rare increase in sales due to new models. Rivian and Hyundai also experienced declines, indicating that the slowdown was widespread across brands. Rivian, however, has a potential solution in the upcoming R2 SUV.
The Future of EVs
Analysts predict a slow recovery as manufacturers reduce prices and expand incentives. Charging infrastructure is improving, and some EVs are approaching price parity with gas-powered vehicles. The initial boom may be over, but the shift towards electric vehicles is not yet finished.
The EV market is evolving, not collapsing. The focus is now shifting toward affordability, infrastructure improvements, and sustained innovation to drive long-term adoption.
