EV Sales Will Be Cut in Half When Tax Credit Expires, Analyst Says

Electric vehicle makers are bracing for major turbulence as the end to federal EV tax credits on September 30, 2025, approaches fast. Yahoo Finance reported some wild predictions from a leading analyst on September 3, 2025.

Analysts warn that the move could slash U.S. EV sales in half compared to current levels, with one expert predicting market share will sink well below 4% immediately after the incentives disappear. That would be a dramatic reversal from the recent boom: EVs made up 9.1% of new U.S. car sales in August, according to Cox Automotive, thanks to a last-minute rush by buyers eager to lock in the credit.

“I think you’re going to see third quarter EV sales remain strong simply because people want to buy before the Sept. 30 deadline,” Karl Brauer, executive analyst at iSeeCars.com told Yahoo Finance. “But after that … we’re going to see a pretty big drop.”

“I could see US [market share] dropping well below 4% immediately after the Sept. 30 incentive goes away and maybe settling in the beginning of 2026, around 4%,” continued Brauer.

The IRS guidance offers some wiggle room for deliveries after the deadline, but once those orders are fulfilled, analysts say automakers could face a painful slowdown.

Some forecasts are even gloomier than previous academic research. A UC Berkeley study published last year estimated U.S. EV sales would fall 27% without the federal credit. Brauer sees the hit being much worse.

Carmakers themselves are sounding cautious. GM announced record-breaking EV sales in August, more than 21,000 vehicles across Chevy, Cadillac, and GMC brands, but acknowledged challenges ahead.

“There’s no doubt we’ll see lower EV sales next quarter … and it may take several months for the market to normalize,” said Duncan Aldred, GM North America’s senior VP. “We will almost certainly see a smaller EV market for a while, and we won’t overproduce. Still, we believe GM can continue to grow EV market share.”

How will automakers respond? Likely with price cuts.

“You may remember a couple of years ago when GM ran out of the $7,500 credit … they simply lowered the price of cars like the all-electric Bolt by $7,500,” Brauer said to Yahoo Finance. “We’ll see if there are similar price reductions after the incentive goes away.”

EVinfo.net reached out to EV expert Loren McDonald, Chief Analyst at Paren, for comment.

McDonald said: “Yes, of course after you have the biggest quarter in history in Q3 because of a tax credit deadline that motivates consumers to pull the trigger, Q4 2025 and Q1 2026 will drop well below Q3 2025. Duh. But to drop to 4% sales share, well as the old TV commercial said, I’ll eat my hat if that happens. Q4 2025 and Q1 2026 are clearly going to be challenging quarters, but for last 10 years or so, I’ve been on record that the impact of the federal EV tax on sales is overplayed. For a majority of buyers it is a discount, not the main reason to get an EV.”

“The one difference is every time there is a change in the program with a deadline, then everyone rushes out (as I probably will this month) to take advantage of the tax credit because of the deadline. But, after a few quarters, consumers will forget about the loss of the tax credit and focus on wow, the new Chevy Bolt, Nissan LEAF, Chevy Equinox, Honda Prologue, Hyundai IONIQ 5, Toyota CH-R BEV, etc are great vehicles and competitively priced. 2026 is very likely going to be a bit of a challenging year for BEVs — but with a number of exciting new models coming to market later in the year and the following year — 2027 should be a record year in the US for EV sales,” McDonald continued.

For now, the EV market is racing toward an uncertain Q4. Demand is still strong in the final days of the tax credit era, but October could mark the start of a much tougher road ahead.

EVinfo.net’s Take: ‘Cut in Half’ Far Too Gloomy

Brauer mentioned price cuts in the past when GM ran out of the credit. We believe there will likely be OEM price cuts to make up the difference again this time.

On top of that, Americans are realizing lots of benefits that EVs provide, more and more every day. The vast anti-EV misinformation that is currently circulating can’t hide the fact that friends, neighbors, and others people come in contact with are saving money every day by driving electric. The good news for EV adoption is spreading, and spreading fast. EV drivers like myself are telling others about our incredible long-term cost savings. And the message is getting through.

We believe Brauer’s prediction is far too gloomy, and does not take into account what an exciting global change this is. We believe there will be another sales growth slowdown for EVs sold in the US after the credit is cut, but it will be minor and won’t last long. We agree with McDonald that buyers will forget about the credit and sales growth will continue to go up, with cheap long-range models like the LEAF and Bolt coming.

Global market shares for internal combustion, hybrid, and electric vehicles have shifted dramatically over the last six years, far faster than automotive experts could have predicted. The EV revolution is moving forward at an unbelievably fast pace.

The global auto market has reached a historic tipping point: electrified vehicles now represent 43% of all new car sales worldwide as of Q1 2025, according to the latest industry data from JATO, reported by Visual Capitalist. That’s a remarkable leap from just 9% in 2019, underscoring the rapid acceleration of the transition away from internal combustion engines.