EV Tax Credit Repeal, One Year On: Used EV Sales Hit a Record

A year without the $7,500 credit

On September 30, 2025, the federal tax credit for electric vehicles ended. Congress had cut it as part of the One Big Beautiful Bill Act, and buyers hurried to use it before the deadline.1 The credit had been worth up to $7,500 on a new EV and up to $4,000 on a qualifying used one. It was even more generous for people who leased, because a leased EV qualified no matter its price, where it was built or the driver's income.1

A year later, the picture is less simple than either side of the policy fight predicted. New EV sales dropped and have stayed low. Used EV sales, oddly, are setting records. Hybrids have become the default choice for buyers who want better fuel economy without charging. Prices, discounts and loan rates help explain why each part of the market went its own way.

New EVs: lower, but stable

The sources agree on the size of the drop. Cox Automotive data shows EV sales falling 36% year over year in late 2025 and 27% in the first quarter of 2026.1 Edmunds counted EVs at more than 11% of new-car sales in September 2025. One month later the figure was 5.8%.1 Since then, EVs have held at roughly 5% to 6% of new sales through 2026. Ivan Drury of Edmunds described the market as weaker than before but not in free fall.3

Cox's September 2026 report gives the latest figures. New EV sales were about 86,632 units, down 40.7% from a year earlier. Their share actually rose to 6.5%, because sales of gas and other conventional vehicles fell faster.11 The year-over-year drop looks severe partly because September 2025 was the pre-deadline rush, when 146,076 EVs sold and took 11.5% of the market.11

The sources differ mainly in tone. A 24/7 Wall St. piece called America's EV plans dead, pointing to a 30.7% fall in the first nine months of 2026 and an 80% drop in Ford's third-quarter EV sales.9 Cox's Stephanie Valdez Streaty sees the market settling at a lower level, with steady demand for new EVs and faster growth in used EVs and hybrids.2

The numbers fit the second view better. A collapse would mean shrinking share. Instead, share has held in a narrow band for three quarters, and new EV supply dropped to 68 days in September, below the 78 days for conventional vehicles.11 Shoppers are still buying EVs. They just aren't buying as many as when the government covered part of the price.

New-car prices and discounts: a smaller gap

Without the federal credit, the sticker price matters more. The average new EV sold for $55,842 in September, according to Cox. That was up 2.3% from August but down 3.1% from a year earlier.11 Kelley Blue Book put the figure at $55,879 and said cheaper models were pulling the average down.13

The EV price premium has narrowed sharply. In September, EVs cost $5,611 more than conventional vehicles on average, compared with $8,665 across 2025.11 In percentage terms, the gap has held near 11% all year, down from about 18% in 2025.13 NPR reported a similar gap in August: just over $54,000 for an EV versus just under $50,000 for a gas car.1

Buyers should note that automaker discounts are shrinking. EV incentives fell to 11% of the transaction price in September, about $6,117 per vehicle. That was the lowest level of 2026, down from 14.2% a year earlier.11 Across the whole market, incentives were 6.6%, or about $3,359.13 EVs still carry about twice the average discount, but carmakers are no longer adding much on top to replace the lost credit. Higher prices on Tesla's two best-sellers drove much of September's increase. The Model 3 averaged $53,804 and the Model Y $53,052.11

Meanwhile, the average price of a new vehicle of any type is close to an all-time high, according to Kelley Blue Book.13 The average now tops $50,000.37 An EV's premium is shrinking, but it sits on top of a car market that is expensive overall.

Loan rates: slightly lower, still a burden

Financing hasn't changed much. Bankrate's weekly survey put the average 60-month new-car loan at 7.14% in mid-October, with 48-month used-car loans at 7.55%.32 Experian's figures are a bit lower: new-car loans averaged 6.35% in the second quarter of 2026, down from 6.79% a year earlier.37 Credit score still matters a great deal. U.S. News reports October averages of 4.41% for new cars and 6.29% for used cars among top-tier borrowers, rising past 13% and 19% for subprime borrowers.31

Lenders are more willing to lend, however. Cox reports that auto credit availability reached its highest level since November 2015.15 Cox also raised its full-year forecast for new-vehicle sales to 16.1 million, despite high fuel prices and elevated interest rates. It noted that leasing is still weaker because the EV credit is gone.17 That detail matters. Leasing was the easiest way to use the credit, and its decline is one reason new EV sales lost momentum.

Used EVs: the credit's lasting effect

The biggest surprise is in the used market. Cox reports used EV sales of about 47,862 in September, up 21.2% from a year earlier. Used EVs reached a record 3.3% of all used-vehicle sales, while used conventional sales fell 4.4%.11 Recurrent says used EV sales have recovered even though overall used-car sales are down 3% from last year.21

The credit itself is a big reason. Many 2023 leases, the first year the $7,500 credit applied to leased cars, are ending now, sending more EVs to dealer lots at lower prices.21 Valdez Streaty expects more than 300,000 EVs to come off lease in the next year.1 Drury told NPR that without the credit, today's used EV market would look completely different.3 The policy is gone, but the cars it put on the road are still in circulation.

The sources disagree on used EV prices. Cox data cited by Recurrent puts the average used EV listing at $37,441 in August, 8% higher than a year earlier.21 Cox's wholesale index shows EV values up 4.5% year over year in August while other vehicles fell 0.9%.23 Edmunds, measuring from a different starting point, found average asking prices down nearly 7%, from $39,082 on the day the credit ended to $36,367 on September 1, 2026.26 Recharged's sales data shows prices falling to a low in February and climbing through September.28

The most likely explanation is that prices dipped after the deadline and through winter, then rose again once gasoline became expensive. That fits most of the data. Researchers writing in The Conversation found used EV prices rose 13% from the start of the Iran war through late June, about $3,500 on a typical car.22 Gasoline was about $4.47 a gallon nationally in late September, up from roughly $3.12 a year earlier.23

Hybrids and gas prices

Gas prices also explain where many buyers went instead. Edmunds says hybrid sales rose almost 27% over the past year, jumping in March after the war with Iran began.1 Hyundai's August hybrid sales rose 33%, and Kia's nearly doubled.3 USA Today counts Toyota, Hyundai and Kia among the winners, while GM, Ford and Volkswagen struggle after betting heavily on EVs.10

One point is easy to miss. Expensive gasoline has helped used EVs much more than new ones. Recurrent says seven months of high fuel prices haven't lifted new EV sales, but they have more than offset the loss of the $4,000 used credit.21 Buyers seem willing to go electric when the price is right, and the used market is where the price is right.

The outlook

Cox expects new EVs to hold near 6% of sales while used EV sales keep hitting records.15 States are filling some of the gap. Colorado now offers $6,000 off a used EV for income-qualified buyers.23 Illinois and New Mexico also offer rebates or credits for used EVs.26

Repealing the credit did not end EV adoption. It shifted where adoption happens. New EV growth now depends on cheaper models and automaker pricing, while the used market depends on off-lease supply and gas prices. Valdez Streaty says adoption may be slower, but she still expects the future to be electric.4 A year in, the data supports that view, with one condition: much of the growth is coming from second-hand cars, not new ones.