The federal $7,500 credit for new electric vehicles stopped applying to cars acquired after September 30, 2025. Almost a year on, there is finally enough data to say what the removal actually did to the American EV market, rather than what either side predicted it would do. The short version: the crash was real, it was front-loaded, and it did not last as long as the pessimists expected.
What Changed, and When
The One Big Beautiful Bill Act, signed into law on July 4, 2025, ended both the $7,500 credit for new EVs and the $4,000 credit for used ones, applying to vehicles acquired after September 30, 2025. That gave buyers a clearly marked deadline roughly three months out, which is exactly the kind of thing that distorts a market.
The Pull-Forward
Buyers behaved rationally. Anyone who had been considering an EV within the next year had a strong financial reason to buy before the end of September, and they did. Manufacturers recorded 437,487 EV sales in the final eligible quarter, a historic high.
The hangover followed immediately. The next quarter came in at 234,171 units, close to a 46 percent fall. New EV sales were down 28 percent year over year in the first quarter of 2026.
The Recovery
More recent data suggests the market has been finding its level. Sales have recovered from the immediate post-deadline slump, helped by manufacturers absorbing part of the gap through discounting, cheaper leases and lower-priced entry models.
There has also been a visible shift in what people buy. As we covered in Kia's record August, hybrid demand has surged, with the brand's hybrid sales up 99 percent year over year. Some of the buyers who lost $7,500 off an EV did not leave the electrified market. They moved one step down it.
Some of the buyers who lost $7,500 off an EV did not leave the electrified market. They moved one step down it. On the shift from EVs to hybrids
What Incentives Remain
The purchase credits are gone, but they were never the only support available. Several other measures have continued to apply:
- Auto loan interest deduction. A deduction of up to $10,000 annually for qualifying vehicle purchases, which can offset part of the financing cost.
- State and utility programmes. These vary enormously by location and are now the most significant remaining lever for most buyers. Several states run their own rebates, and utilities frequently offer credits for home charger installation or off-peak charging rates.
- Home charging equipment credit. The federal credit for home charger installation remained available through June 30, 2026, so buyers who installed before that date may still be able to claim it on the relevant return.
What It Means If You're Shopping Now
The removal of the credit made EVs more expensive, but it also changed how manufacturers price them. With no federal subsidy flattering the sticker, the pressure to compete on actual transaction price has increased, and that has produced better lease deals and more aggressive incentives from the brands than existed in 2024.
For buyers, the practical advice has shifted. The question is no longer whether you qualify for a federal credit. It is whether your state or utility offers anything, how the lease maths compares with buying outright, and whether a hybrid covers your use case for less money. For many households, particularly those without home charging, the answer to that last question has changed.