A Decade-Long Rise in Electric Vehicle Sales Halts in 2025
For the first time in a decade, the rising trend of electric vehicle (EV) sales in the United States has hit a snag. Fresh data reveals that in 2025, the yearly registration of new EVs decreased for the first time in 10 years.
This unexpected turn of events has left many puzzled, with a couple of surprising causes behind the decline.
The Disappearance of EV Tax Incentives
One of the key reasons behind the drop in EV sales is the withdrawal of the EV tax credits. These incentives, which included a significant $7,500 tax credit, were designed to encourage consumers to switch to electric vehicles. However, in a recent move, the US Administration decided to terminate all federal EV incentives.
The impact of this decision was immediate and dramatic. Many savvy consumers hurried to purchase EVs in the third quarter of the year to take advantage of the incentives before they were removed. This rush, however, led to a sharp 48% decline in EV sales in December — an outcome that was anticipated by many.
High Cost and Range Anxiety Continue to Deter Buyers
In spite of various discounts and tax breaks, EVs are still more costly compared to their gasoline-powered counterparts. Additionally, 'range anxiety' — the fear of running out of battery power before reaching a charging station — remains a significant concern among potential buyers. Even though EVs are offering more mileage on a single charge and charging points are becoming more accessible, the time required to fully charge an EV is still considerably longer and more inconvenient compared to refueling a gasoline car.
Unexpected Issue: Rapid Depreciation of Electric Cars
Another unexpected issue contributing to the drop in EV sales is the rapid depreciation of electric cars. While car buyers don't necessarily expect to profit by reselling their vehicles, they do expect their cars to retain some value over time.
However, studies show that, on average, EVs depreciate faster than equivalent gasoline cars. This is particularly problematic for high-end electric cars. The data indicates that EVs lose their value quite quickly.
This might be largely attributed to the fact that EVs are essentially software-driven vehicles. Just like a smartphone or a computer, an electric car's value and performance are significantly impacted by software updates and advancements.
Consider this: Would most people be willing to use a 10 or 15-year-old smartphone? Probably not. And an electric car, with its reliance on software and technology, has more in common with a smartphone than with a traditional car from a few decades ago.
This comparison illustrates why electric cars might depreciate faster — the rapid pace of technological advancements can make even relatively new EVs feel outdated.
These factors combined have led to the first decrease in EV sales in a decade, prompting a reconsideration of strategies to promote the adoption of electric vehicles.