One Year After Federal EV Credit Ends, Hybrids Surge as EV Share Stalls at 6%
One year after the $7,500 federal electric vehicle tax credit expired in September 2025, new EV sales in the US have stabilized at roughly 6% of the market, down from a 10% peak. While pure electric adoption has slowed, hybrid vehicle sales surged 23% year-over-year, capturing a record 16.3% market share. Automakers like GM and Ford maintain long-term EV commitments but have canceled several models, shifting focus to hybrids and used EVs to meet consumer demand amid rising gas prices.
Key points
- The federal $7,500 EV tax credit was eliminated on Sept. 30, 2025, by a law signed by President Trump.
- New EV sales comprise about 6% of the US market in 2026, down from 10% before the credit ended.
- Hybrid sales volume increased 23% from Q2 2025 to Q2 2026, reaching a record 16.3% market share.
- Toyota holds 44% of hybrid registrations, though its share has dropped by over four percentage points as Kia and Hyundai gain ground.
- Average EV range has increased 20% since 2021, and global battery pack prices have fallen 21% to $108 per kilowatt-hour.
- State-level incentives remain in about 20 states, with Colorado offering up to $9,000 for new EVs to low-income residents.
Background
Our September 2026 coverage noted that EV sales dropped 24% in the first half of 2026 compared to the prior year, with automakers scaling back pure-electric models. California introduced a $3,750 instant rebate, and Tesla signaled a shift away from Model S/X production. The current data confirms this trend, showing that while new EV demand has stabilized, the market is diversifying toward hybrids and used EVs.
How outlets are covering it
USA TODAY emphasizes the 'tug-of-war' between rising gas prices and strong consumer savings, noting that hybrids are the clearest growth story. Marketplace.org highlights the 'patchwork' of state incentives, pointing out that federal support removal has left EVs to 'thrive on their own merits,' with some automakers canceling lines entirely. Fitch Solutions forecasts a sharp decline in EV sales for 2026 due to weakened policy support, predicting slower market penetration as consumer preference shifts to hybrids. While USA TODAY and Marketplace agree on the hybrid surge, Fitch views the overall EV trajectory as significantly weakened in the near term.
Why it matters
The shift from federal subsidies to state-level incentives and hybrid adoption reflects a broader change in US auto policy. Consumers are prioritizing fuel efficiency without the infrastructure commitment of full electrification. For automakers, this means a longer transition period, with hybrids serving as a bridge technology while battery costs and charging infrastructure improve. The market is becoming more diverse, with consumers choosing among a broader mix of powertrains rather than a single dominant technology.
What to watch
State-level incentives will likely become more critical as federal support remains absent. Automakers will continue to invest in hybrid models while maintaining long-term EV commitments. Battery technology and charging infrastructure are expected to improve, potentially boosting EV adoption in the long term. Used EV sales may continue to grow as new EV prices remain high without federal credits.
- One year later, here's what happened after EV tax credits died USA Today
- A year after federal EV tax credits ended, a patchwork of state EV incentives remains Marketplace.org
- Fleet EV Buying Shifts as Sales Fall and Prices Ease Environment+Energy Leader
- The Prospects of an Electric Vehicle Future in the US Blur Further StreetInsider
- BMI | US EV Adoption Slows As Federal Support Fades Fitch Solutions
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