Q2 EV Sales Dip During Record First Half; Q3 Poised for Spike Before Tax Credit Expires

According to the latest report from Cox Automotive’s Kelley Blue Book team, sales of new electric vehicles (EVs) in the second quarter of 2025 were lower year over year by 6.3%, in line with the Cox Automotive forecast. A total of 310,839 new EVs were sold in the U.S, down from 331,853 in the same period a year earlier. Sales in Q2 were higher than in Q1 by 4.9%, and total EV sales through the first half of 2025 set a record at 607,089, representing a 1.5% year-over-year increase.

“Lower EV sales last quarter underscore the market’s ongoing challenges, as growth in the auto business ebbs and flows on consumer demand,” said Stephanie Valdez Streaty, senior analyst at Cox Automotive. “The year-over-year decline in Q2 was only the third decline on record, and a sign of a more mature market. The increase from Q1 may well be the start of a rush ahead of the federal incentive phase-out, offering a short-term boost in an otherwise uncertain landscape. With government-backed incentives set to end in September and economic pressures mounting, the second half of the year will be a critical test of EV demand. Q3 will likely be a record, followed by a collapse in Q4, as the electric vehicle market adjusts to its new reality.”

EV sales in Q2 were lower year over year despite healthy inventory levels, more than a dozen new entries, and strong sales incentives. In fact, sales incentives last quarter were well more than 10% of average transaction price (ATP); in June, average EV incentives reached an all-time high of 14.8% of ATP, nearly $8,500.

In the U.S. EV market, the two largest movers in the first half of 2025 were General Motors, the largest automaker in the U.S., and Tesla, the largest EV maker. General Motors, after some delays, is finally streaming a strong collection of EVs to market across its Cadillac, Chevrolet and GMC brands. GM sold more than 78,000 EVs in the first half of 2025, more than twice the volume posted in 2024. Chevrolet was the No. 2 best-selling EV brand in the U.S. at the end of the first half, charging passed both Ford and Hyundai and helping grow GM’s share of total EV sales to 12.9%, placing GM firmly as the No. 2 EV player and behind only Tesla.

Year-Over-Year Volume Change
First Half 2025

While GM gained more than 6 percentage points of share, Tesla gave away a similar amount. By volume, Tesla’s sales fell by more than 12% year over year in Q2, following a decline of nearly 9% in Q1. The EV pioneer’s share of total U.S. sales (3.4%) and share of the EV market (44.7%) have both declined year-to-date in 2025. Tesla’s many issues do not require a full rehashing here: Suffice it to say, the hyper-competitive EV market is providing the troubled automaker no relief.

At the start of Q3, and with the stroke of a pen at the White House, the math for the EV market shifted dramatically: The government-backed tax incentives of up to $7,500 for qualified new EV sales will be gone on October 1. The popular “leasing loophole,” which greatly expanded the pool of qualified sales, is also dead, and money allocated to support important infrastructure improvement has also been curtailed.

In the U.S. market, the used EV market is now the shiny new thing – retail used EV sales surpassed 100,000 units in Q2, a record, and growth is accelerating. Government-backed incentives on used EVs have also been killed, but Cox Automotive research suggests only approximately one-third of used EVs qualified for the incentive anyway. With availability growing and incentives for new EVs expected to fall, the used EV market may grow faster in the quarters ahead. 

Cox Automotive still believes that new EV sales will continue to expand in the U.S., but the growth trajectory has been curbed. Expectations for total new EV sales in the U.S. in 2025 have been lowered from approximately a 10% share of total sales at the end of the year to an 8.5% share; volume is expected to remain flat year over year.  

Meanwhile, the world leader in EVs continues to race ahead and remake the global automotive landscape: In the first half of 2025, well more than 3 million EVs were sold in China and exports accelerated.

Note: Kelley Blue Book counts exclude super exotics.