US electric vehicle sales rebound after tax-credit shock

Electric vehicle sales in the U.S. have grown for three consecutive quarters, according to a new report from Cox Automotive, after tanking last year following the cancellation of federal tax credits for EV purchases. EVs captured 6.1% of the U.S. market, their best showing since the third quarter of 2025. The EV market is “finding its footing again,” Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said in an analysis accompanying the report. EV prices have become more competitive, she added, and high gas prices have sparked renewed consumer interest.

Toyota, Rivian and Subaru led the pack. Sales of the Toyota bZ and Lexus RZ about doubled following a refresh that hit dealerships late last year. The updated models adopted Tesla-style charging ports and received larger batteries, more powerful motors and faster charging times — upgrades that moved the two models from laggards to among the EV market’s stronger performers.

Tesla’s sales dropped 20% year-over-year in the same period. The company still retains the first-mover advantage, though: it sold over half of all EVs in the U.S. during the third quarter, even as rivals close the gap.

The U.S. recovery mimics what happened in Germany after its government stopped incentives for EV purchases in November 2023, a year earlier than planned. German EV sales fell by more than half the following month. But after hitting that low, the market recovered steadily — German EV sales in August, the most recent month for which data is available, were the second-highest on record.

Why it matters

The rebound suggests automakers that cut prices and improve charging compatibility can keep growing EV demand even without purchase subsidies — a pattern Germany already showed, and one other markets weighing an end to EV incentives will likely watch.