U.S. electric vehicle sales fell 16% in the three months after gas prices jumped from $2.94 per gallon to $4.35, even as hybrids climbed 18% over the same period. The divergence suggests that Americans are struggling to find electric vehicles rather than rejecting them, a dynamic that carries major implications for automakers, consumers, and U.S. climate goals.
The EV slump stems largely from a supply shock set off by policy changes. A federal incentive worth up to $7,500 per vehicle was removed at the end of September 2025, prompting manufacturers to slash production. General Motors eliminated more than 3,400 positions in its EV and battery operations, while Ford absorbed a $19.50 billion write-down and halted the making of the fully electric F-150 Lightning. EV market share briefly hit 11.30% in September as buyers rushed to beat the credit deadline, then collapsed to 4.30% two months later.
When gas prices rose again, the constrained supply became evident. Median discounts on new EVs narrowed from 9.8% below list price in February to 4.7% by June, and new EV inventory fell from around 130 days of supply in the first quarter to 78 days in August. Used EV prices climbed 13% by late June as available stock shrank to 31 days' worth, about a quarter below the prior year.
Meanwhile, hybrids benefited from years of production expansion. Dealerships carried 19% more hybrid stock in March than a year earlier, allowing buyers to find and purchase them.
Policy is also working against an EV recovery. Rules issued September 28 loosen fuel-efficiency requirements for gasoline vehicles and phase out a credit-trading system in 2028 that had given manufacturers a financial reason to build EVs. The government projects the change saves buyers about $1,289 at purchase but costs them roughly $1,600 more in fuel over the vehicle's life.
Access to cheaper foreign models is blocked by policy. China produces roughly three-quarters of the world's electric cars, and in 2024 buyers there could choose from over 130 electric models priced below $40,000, compared with just four in the U.S. Import duties exceeding 100% on Chinese-made vehicles and a Commerce Department rule barring cars from manufacturers with Chinese ties from model year 2027 mean the gap is unlikely to close soon. Unless policy shifts, EV makers such as Massimo Group (NASDAQ: MAMO) could face an uphill task growing sales in the coming years.
