Record EV sales in the US as tax credit disappears

US battery electric (BEV) & plug-in hybrid (PHEV) sales hit record highs in August and September 2025 as consumers rushed to purchase vehicles before the federal tax credit expired. The New Clean Vehicle Credit (30D) and Qualified Commercial Clean Vehicle Credit (45W) were both eliminated on 30 September 2025, following changes introduced in the One, Big, Beautiful Bill Act (OBBBA).

Until its repeal, the credit provided up to $7,500 per vehicle. The federal incentive had been a key driver of robust EV demand throughout 2025. After the July announcement that the program would end, consumer interest surged, culminating in record-breaking sales in the final two months before the credit’s expiration.

How important were the credits?

The EPA reported that in 2025, 20 BEVs and one PHEV qualified for the 30D tax credit, representing 55% of all electric vehicle sales in the first nine months of the year. To be eligible, buyers had to meet income limits, purchase the vehicle for personal use, and primarily operate it within the US.

The 45W credit also offered up to $7,500 per vehicle for models weighing less than 14,000lbs. Unlike the 30D credit, 45W was aimed at business and fleet buyers, with no cap on the number of credits a company could claim. The structure of the 45W credit allowed automakers to extend their benefits to customers through leasing arrangements. Under this approach, the OEM claims the commercial tax credit and can reduce the lease price—effectively passing part or all of the incentive on to consumers. This loophole has fueled a surge in EV leasing since 2023.

Notably, leased vehicles under 45W were not subject to the strict sourcing or assembly requirements tied to battery components or critical minerals. Nor did they need to be built in North America—significantly expanding the range of EVs eligible for the full credit.

Although the 30D tax credit applied to only 21 BEV and PHEV models in 2025, the 45W leasing provision enabled many more EVs to benefit from federal incentives. Combining the effects of both programs, we estimate that over 90% of all EVs purchased in 2025 received some form of tax credit support.

How have OEMs performed in the US in Q3 2025?

How will EV sales perform in the US in Q4 2025 and beyond?

Following a record-breaking quarter for EV sales in the US, demand is expected to decline sharply in Q4 2025 as both consumers and businesses lose access to the federal tax credits that had supported purchases. Several automakers have introduced short-term strategies to soften the impact, such as General Motors’ dealer stock incentives, allowing credits to be claimed on pre-purchased inventory, or Hyundai’s price reductions to maintain competitiveness.

However, these temporary measures are unlikely to offset the structural challenges facing US electric vehicle production. Persistent high manufacturing costs, modest federal tailpipe emissions standards, and rising tariffs on vehicles and components continue to constrain profitability and discourage investment in domestic electrification. As a result, many OEMs such as GM, Mercedes-Benz, VW and Nissan are scaling back EV production plans heading into 2026.

This data and insight are sourced from Benchmark’s EV & Battery Database, which provides subscribers with:

To see the full scope of Benchmark’s EV & Battery Service, including a long-term market forecast,find more information here.