Key Takeaways
Despite an overall 10% growth in the car market, EV sales dropped 5% in April, as consumers weighed utility, price, and possible policy changes in the sector.
Consumer interest continues to build for hybrids that do not have the range and charging anxiety of electric vehicles.
According to dealers, fewer discounts and promotions were also responsible for slower EV sales.
With Congress considering changes to the generous tax credits for electric vehicle buyers, accelerated buying in the first quarter may have contributed to the EV sales slowdown.
Repealing EV subsidies would result in savings to taxpayers of about $300 billion over the next 10 years, significantly more than CBO estimated at the time of the passage of Biden’s climate bill.
Electric vehicles have a place in the U.S. transport system and will probably grow as they find their niche market. Still, a return to government policies that place the buyer at the center of decision-making, rather than the government, would be a significant improvement.
EV sales fell 5% in April, despite a 10% growth in the car market. The declines were across most brands, including foreign-owned Kia and domestically owned Ford. Tesla, which has accounted for around half of EV sales in the United States, had sales drop nearly 13% due to targeted demonstrations against Elon Musk’s work for the Department of Government Efficiency and due to a planned production shutdown that limited sales of the Model Y SUV. Sales of Rivian’s R1T pickup and R1S SUV declined by half, with Rivian blaming President Trump’s trade policy on the slump because the company said consumers had become more price-conscious. Rivian vehicles average around $88,000, pricing many buyers out of the market. Dealers also cited lower EV interest due to fewer promotions and discounts that have increased sales in the past. One dealer noted that discounts had probably doubled EV sales from what they would have otherwise been. Whether this declining trend will continue is yet to be seen, as monthly U.S. EV sales since 2021 have declined thrice.
Charging is still a concern for many buyers as it requires far more time than refueling a gasoline-powered vehicle at the pump. This issue has slowed purchases of the battery-powered Toyota bZ4X at the Longo Toyota in El Monte, California. In April, sales of the Toyota bZ4X, its only U.S. EV model, declined by nearly 80%. Hyundai claimed its April decline in EV sales was mostly a result of shifting production to a new factory in Georgia.
Dealers have often cited bargain-basement deals as one of the biggest reasons customers bought an electric vehicle, particularly with lease deals. For example, some buyers were able to lease a $42,000 Hyundai Ioniq 5 for less than a $22,000 Elantra gas-powered sedan, an entry-level model. Lease deals were particularly attractive since Biden’s Treasury Secretary, Janet Yellin, found a loophole in the Inflation Reduction Act (IRA) that allowed the full tax credit to be applied to leased electric vehicles. The loophole allowed the tax credit to be claimed if the vehicle was leased, regardless of where the battery components and vehicle were manufactured. The intent of the IRA was for the tax credit to be applied to electric vehicles that were manufactured from components made in the United States or its allies to develop those industries domestically. President Trump is threatening to cancel the $7,500 federal tax credit, which could also have affected April sales as buyers may have rushed to purchase electric vehicles in the first quarter.
Congress is now considering repealing the IRA’s EV subsidies, saving taxpayers approximately $300 billion from 2026 to 2035. When the IRA was passed in 2022, the Congressional Budget Office estimated the cost of its energy-related provisions to be around $370 billion over 10 years, including the EV tax credits and credits for renewable generating technologies. Because the tax credits in the IRA are essentially uncapped, cost estimates have significantly increased. In 2023, Goldman Sachs projected the total cost of the subsidies at $1.2 trillion, while the Cato Institute later placed the upper bound at $1.97 trillion and as much as $4.7 trillion by 2050. The EV tax credits represent a significant portion of the total estimated cost of the IRA tax credits.
The sales growth in electric vehicles has been slowing, as those who could afford their higher prices were early adopters of the technology. As a result, auto manufacturers turned to producing hybrids, which give car owners far more flexibility in fueling options and range, another EV factor that often pushes buyers away from purchasing an electric vehicle.
Despite the dip in April sales, EV demand is expected to grow. Light-duty electric vehicle sales are expected to reach 10 million by 2032 from 1.7 million sold in 2024. Annual used EV sales are expected to grow from 390,000 in 2024 to 3 million in 2032. New sales of heavier vehicles, ranging from cargo vans to semi-trucks, could grow from 2,000 sold in 2024 to 365,000 sold in 2032. Increasing EV demand will cost taxpayers more in the coming years, as there is no limit on the tax credits in the IRA.
The Biden administration used regulatory action to make electric vehicles a “clean” energy mandate through its tailpipe emissions rule. But electric vehicles are far from clean. Their batteries require high amounts of critical minerals that must be mined and can be environmentally hazardous if disposed of in landfills. China dominates the processing of critical minerals with cheap coal power. Depending on where an electric vehicle is being charged, the electricity could be produced by fossil fuels that represent 60% of U.S. generation and produce carbon dioxide emissions, or from intermittent renewable sources, which produce them in their manufacture and are causing problems with the grid.
Conclusion
Sales of electric vehicles have slowed, and in April 2025, they were down 5% despite a market that grew at 10% in that month. This may not be a trend, as monthly declines have occurred three times since 2021. However, EV interest has waned because of fewer discounts and promotions with the possible removal of the EV federal tax credit, owner stress over recharging, and the option of purchasing a hybrid instead. The federal EV tax credit is a significant cost to taxpayers, estimated at $300 billion over the next 10 years. Congress is discussing the repeal of the IRA tax credits. Hopefully, they will repeal the EV tax credit so that consumers and businesses can feel free to go electric without subsidies or regulations nudging them to do so and costing taxpayers billions, or be free to purchase a gasoline vehicle if that suits their needs better.
