Cox Auto Predicts 2025’s US Auto Sales to be 10% EV, 15% Hybrid and Plug-in

The U.S. market for electric vehicles (EVs) is on track for continued growth in 2025. According to Cox Automotive’s 2025 Outlook, one out of every four vehicles sold will be electrified, with EVs expected to account for about 10% of the total market. This marks a significant increase from approximately 7.5% in 2024. Hybrids and plug-in hybrids will make up around 15% of total sales, while sales of pure internal combustion engine (ICE) vehicles will drop to 75%, the lowest level on record.

Several factors are fueling this growth. First, around 15 new EV models are expected to enter the market, providing consumers with more choices and intensifying competition. Additionally, many consumers are making the decision to purchase EVs before potential federal policy changes, such as cuts to tax credits, come into effect. State-level incentives are also helping to offset any reductions in federal support.

Meanwhile, the rapid expansion of the EV charging network is alleviating concerns about charging availability, making it easier for consumers to transition to electric vehicles. This combination of new models, financial incentives, and infrastructure growth is driving the shift toward electrification, setting 2025 up to be another record-breaking year for EV sales in the U.S.

Cox Automotive didn’t mention detrimental effects of the potential cutting of the Federal EV tax credit. EVinfo.net supports saving the credit, protecting the economy and jobs, as competition from low-cost, high-quality Chinese EVs is already significant, and will only increase with time. We expect if the credit is cut, there will be a short period of EV sales growth slowdown, but sales will tick back up as buyers and OEMs recover from the the initial shock.

US Auto Market Was Strong in 2024

The U.S. auto market closed out 2024 on a positive note, maintaining momentum despite some uncertainties. New-vehicle sales for the year reached nearly 16.0 million, marking a 2% increase from 2023 and the highest volume since before the pandemic. This strong performance exceeded Cox Automotive’s forecast, with most automakers reporting year-over-year sales growth. Notable exceptions included Stellantis and Tesla, which posted losses. Cox Automotive estimated a 6% drop in Tesla’s U.S. sales for 2024. Stellantis, the maker of Jeep, Chrysler, and Ram vehicles, saw its full-year results decrease 15% year over year for 2024.

General Motors was the top-selling automaker of 2024, while Honda and Mazda also saw significant growth, particularly toward the end of the year. Retail sales showed a particularly strong finish, contributing to the overall success of the year. Despite some challenges, the U.S. auto market remains on a solid trajectory heading into 2025.

“Cox Automotive is optimistic about 2025, with plenty of reasons to believe it will be the best year since 2019,” said Cox Automotive Chief Economist Jonathan Smoke. “The market is gaining momentum, economic fundamentals are improving, and consumer sentiment is pointing in the right direction. We are ready for what 2025 might bring.”

The Economic Outlook for 2025 is Positive

Economic momentum created by the Biden/Harris administration is steadily building as the U.S. heads into 2025. The outcome of the election played a key role in reducing uncertainty around tax policy, which, in turn, contributed to positive stock market performance in the latter months of 2024. This has had a ripple effect, boosting both consumer and dealer sentiment. The economic outlook for 2025 appears strong, with expectations for a 2.6% growth, aligning with levels seen before the pandemic. The risk of a recession is now considered lower, and consumers are feeling more optimistic about the future. This positive shift is largely attributed to the smooth resolution of the election, the easing of interest rates from their peak levels, and a stabilized job market, all of which have contributed to a more favorable economic environment.

Jonathan Smoke spoke in the Cox Automotive Industry Insights and Forecast 2025 call last month, espressing optimism about 2025.

“We think dealers, in particular, are going to enjoy the ride thanks to the Goldilocks economy that is delivering positive momentum at the end of 2024 and setting us up for not too cold, not too hot, but just right growth,” said Smoke.

Affordability Will Improve

While vehicle affordability remains a challenge, there are expectations for improvements in 2025. Credit availability is anticipated to expand as loan portfolio performance strengthens and yield spreads narrow. Auto loan rates have already declined, and approval rates are rising, which is helping to fuel growing demand. If the economy stabilizes as expected and loan performance continues to improve, there is potential for further declines in loan rates, even without additional action from the Federal Reserve. This suggests that Fed policy may play a less significant role in 2025 than it has in recent years. Additionally, new-vehicle inventory volumes are projected to keep increasing, which should drive incentives and support higher sales volumes. These factors together are likely to improve affordability and further stimulate the auto market.

Sales Volumes Expected to Increase for Third Straight Year

Cox Automotive forecasts that 2025 will be the best year for the U.S. auto market since 2019, with new-vehicle sales projected to reach 16.3 million units, a modest increase from 2024. While growth remains slow, the overall trends are positive, marking 2025 as the third consecutive year of growth. This upward trajectory suggests that the market is stabilizing and improving, despite some ongoing challenges.

The retail used-vehicle market is also set to see growth, with used retail sales likely to reach 20.1 million units—the strongest performance since 2021, which was the best year on record for used vehicle sales. However, used-vehicle inventory at retail is expected to stay relatively tight. The Manheim Used Vehicle Value Index is forecasted to rise at a historically normal pace, with prices finishing slightly higher year-over-year in 2025.

Dealer profitability is stabilizing, thanks to strong economic fundamentals that are driving sufficient demand across both the new and used vehicle markets. These positive factors are contributing to a healthy outlook for the auto industry in 2025, reinforcing expectations for a solid year ahead.