Strong Third Quarter For EV Sales, As Expected
The urgency created by the near term expiration of the EV purchase incentive was expected to create “pull-through” demand during the third quarter and that is what happened. Cox Automotive is estimating that EVs had an 11% market share in the third quarter with about 437,487 units sold, about 30% higher than the corresponding quarter one year ago. When Cox reports its EV estimates, they are reporting BEVs. If the trend of a roughly 2:1 ratio of BEV to PHEV holds, the latter will add another 5-6 or so points to overall sales of plug-in vehicles.
How Far and How Fast Will the Rate of EV Sales Drop
Forecasts range from 40-60% but in the short term, it may not be quite so bad.
The IRS slightly loosened requirements such that people with a binding contract to purchase an EV by September 30 could take delivery afterward and a number of manufacturers are offering discounts. The catch is that the discounts are short term, expiring between the end of the month and end of the year.
GM and Ford came up with a nifty workaround in that they would buy unsold inventory from their dealerships, take the tax credit, and subsequently use that savings to offer discounted leases. There is enough separation between them to make that legal. However, both companies backed away from the idea after Senators Moreno (R, OH) and Barrasso (R, WY) wrote to the Department of the Treasury demanding the “loophole” be closed. Both companies are now offering discounted leases and absorbing the margin hit.
BMW announced a $7500 discount on its full BEV lineup and a smaller discount on some of its PHEVs.
Hyundai is offering up to $9800 on the 2026 Ioniq 5 (discounts vary by trim levels). We have also seen 0% financing offers and discounted lease deals on both 2025 and 2026 model year inventory across the Ioniq 5 and 6.
We have seen discounted offers for Kia, Lucid, Toyota, Cadillac, Volkswagen, and Subaru – either cash discounts, 0 or low percentage financing rates, or discounted leases.
Keep in mind that dealerships have the final word on price so some variability is inevitable.
Tesla tends to have a more dynamic pricing history. Deals can come and go quickly. It has unveiled stripped-down versions of the Model 3 and Model Y that trade for $5000 less than the next lowest trim. The configurator lists what is now called the Model 3 Standard at $35,990 and the Model Y Standard at $38,990. These have landed with a thud, at least among the EV pundit class as we have yet to see any data. The company announced on its earnings call that they are bullish and plan to increase production. On the one hand, with many automakers pulling back, it clears the field to a degree. On the other hand, if its self-inflicted brand damage persists, which is entirely possible, it may wind up with oversupply leading to price-cutting late in the quarter as they strive to hit sales targets.
Discounts Lower Sales Tax
On a dollar for dollar basis, a discount is better than a tax credit because it lowers the sales tax.
Also, the state, after lowering its CHEAPR incentive 3 times this year, falling from $2250 to $500 for a BEV, raised the incentive to $1000 for a BEV as of October 1. (PHEVs remain at $500.)
The state legislature, amidst the contretemps over the Combined Public Benefits Charge, bonded some charges that include the EV charging incentive, and in so doing, reduced it. After this year, single family homes that are not located in target communities will not be able to get the charging station incentive. They will still be able to participate in the managed charging incentives.
The party isn’t over, but it requires more work on the part of the consumer to locate the best deals and there continues to be some urgency to lock in the best price.
A Rising Tide Does Not Lift All Boats
Some of the top EV makers had a strong quarter but other companies had declining sales despite the record-setting overall EV sales.
Tesla set a record with 497,099 deliveries, though it was only a shade better than its previous record of 495,570 in Q4 2024. This is a worldwide number. Its USA BEV market share was 41%, about half of what it was a few years ago, with 179,525 units. The Model Y accounted for 64% and the Model 3 was 30% of unit sales.
GM had a strong quarter, up 107% in the USA, placing second with a volume of 66,501. It was driven by a strong performance of the affordable Equinox, as well as by an increase of 155% YoY from Cadillac. The Equinox is now the third best selling EV model after the Tesla Model Y and Model 3. EVs made up over 40% of Cadillac sales.
Ford was up 30% (30,612) with the Mustang Mach-E being the strongest performer.
Hyundai, at 28,760 was up 90%, driven by the Ioniq 5, which accounted for 21,999 of those units.
Honda, which was only selling the Prologue EV, a re-badged Chevy Blazer, was up 60%, with sales much higher than the Blazer. The big difference-makers may have been Honda’s aggressive discounting and the fact that it retained CarPlay/AndroidPlay, which GM has dropped.
Audi was up 232% on the strength of the Q6.
A few companies had a high percentage growth on a small base, such as Rivian, Lucid, Volkswagen, and Porsche.
Companies that were down YoY in Q3, included Acura, BMW, Nissan, Toyota, Lexus, and Genesis. Toyota has had success with PHEVs, but as noted, these are not counted in the Cox data. It had only the slow-selling Bz4x BEV.
Q1 and Beyond
First quarter is traditionally a soft sales quarter, but there are two new affordable EVs that will become available: the refreshed Chevy Bolt and Nissan Leaf, both in the $30,000 range. The Bolt has the form-factor of the EUV version of the previous Bolt. The success of the slightly more expensive Equinox, and the fact that it was consumer outcry that led GM to bring back the Bolt, indicates demand at this price level.
Traditional Manufacturers are hedging amid and uncertain policy environment
Aside from the loss of the Inflation Reduction Act (IRA) incentive, there is turbulence due to the ever-changing tariffs, poorly defined foreign entity of concern rules, and the potential for a full-on trade war with China. The legacy OEMs presumably know, or should know, that reaping short term profits from ICE vehicles at the expense of continued development of EV technology will leave them behind the rest of the world, and leave the country ceding an important industry to China.
The California rules are down but not yet out. By use of the Congressional Review Act and Executive Orders, the rules were invalidated in June 2025. However, California and some other states are litigating the use of these mechanisms to undo the standard. Governor Newsom also reportedly has the state looking into drafting new rules that don’t require a federal waiver.
GM announced it is spending or taking impairment of $1.6 billion to make fewer EVs. The company says it will use ICE profits to further invest in EV technology, such as the pending LMR battery chemistry (Lithium Manganese Rich) and an investment, heralded by the Bolt, in a family of EVs at affordable prices.
Stellantis has scaled back its relatively anemic offerings, though it is offering two extended range electric vehicles (EREV), which typically accommodate larger battery packs than a plug-in hybrid, in the Ramcharger pickup and the Jeep Grand Wagoneer 4xe REPB. The Jeep is expected to have 150 miles of electric range/500 miles total range. The Ramcharger has 145 miles of electric range/690 miles total range.
Ford has suspended production of its F150 Lightning pickup truck. This is less an abandonment than a sign of the times. A fire at the plant of an aluminum supplier in upstate NY has restricted availability. Sourcing added supply internationally would be more expensive with tariffs. This is how they are prioritizing. UPDATE: Ford has announced the suspension will continue, unrelated to the aluminum supplier, as it focuses on introducing a new, lower cost truck platform.
To the extent that these and other companies push forward with EVs, they will have to do so without the near term scale that would have presumably existed had the Biden-era law remained in place and which China has in spades.
Comparison to the rest of the world
While a strong quarter is welcome, it isn’t that impressive relative to the rate of EV adoption in other countries/regions. This chart only goes through the first half of 2025, but you get the idea. It is from the International Council on Clean Transportation.
They make their point succinctly, “Strong policy frameworks are critical for EV market success. Markets with clear targets and consistent policies—from China to Thailand—are seeing the fastest EV adoption and supporting domestic car brands.”
A Few Comments About the IRA
The IRA was more than just an EV purchase incentive. It included supply as well as demand-side stimulus in the form of manufacturing tax credits and loans. It was intended to onshore manufacturing and create a supply chain centered around a combination of domestic and friendly-nation production. And it was working. According to Atlas Public Policy via the BlueGreen Alliance Foundation, “From 2000 to 2024, companies announced 208.8 billion of investments in EV manufacturing corresponding to an estimated 240,000 jobs.” More than half of these were announced since the passage of the IRA. Atlas issued a detailed report tracking this.
The EV purchase incentive never really hit its stride. With the ambitious on-shoring and domestic sourcing goals, and foreign entity of concern restrictions, there were only 20 models from 11 nameplates that were incentive eligible in the months before the expiration out of roughly 90 models for sale. None of these rules, nor the MSRP and income caps applied to leasing, which became the big workaround for consumers. This had the benefit of causing a lot of low mileage used EVs to hit the market and sales of used EVs hit a record of 2.4% of used car sales in Q3.
All of the rules and the opacity of some of them made for a complex consumer proposition. Having to wait for a VIN to confirm if a given vehicle was eligible added further uncertainty. Then there was the layer of dealerships having to register twice with Treasury – once for the incentive and a second time to be able to take advantage of the transfer provision – and it became a lot to keep track of. Take it from us – it kept us busy at the club keeping up with it and answering questions. We had offered detailed suggestions to the Treasury Department (in partnership with the national Electric Vehicle Association) during the public comment period in 2022. Without revisiting all of that (and having flashbacks), the basic approach we suggested was to tie it to model year rather than calendar year, and push more of the responsibility onto the OEMs to represent to what is eligible. This would simplify matters for the consumer, who would easily be able to see whether a vehicle is eligible, and the OEM would be responsible to ensure and report compliance to the feds.
In Closing…
If you procrastinated and think it’s too late to get a good deal on a new EV, think again.