Hello from Editor Z. For the past year, every automaker in the country was bracing for this exact moment. Now it's here, and the numbers back it up: EV market share in the US has fallen off a cliff since the $7,500 federal tax credit expired on October 1, 2025, and a full quarter-plus of sales data now shows exactly how steep that drop has been.
The Post-Credit Numbers Are In
Combined EV and Plug-In Hybrid Share Sinks Below 8%
In January 2026, combined EV and plug-in hybrid market share fell below 8% of new retail sales, down nearly four percentage points from the same month a year earlier. Pure EVs alone now account for just 6.6% of retail sales, down 2.9 percentage points year-over-year, while plug-in hybrids have slipped to a mere 0.9% share.
Gas and Hybrid Models Are Picking Up the Slack
The share EVs lost didn't vanish — it went straight to the competition. Traditional hybrids climbed to 14.7% of the market, up 1.4 percentage points, while gas-only vehicles now make up 77.7% of new retail sales, up 2.7 percentage points from a year ago. That's a clear sign buyers who might have considered an EV are quietly stepping into a gas-hybrid instead.
Buying an EV Just Got Meaningfully More Expensive
Transaction Prices Are Up 18%
Losing the credit didn't just shrink EV market share — it reshaped what EV buyers actually pay. The average EV transaction price hit $51,981 in January 2026, up 18.1% year-over-year, while the average gas vehicle transaction price rose only 0.9% to $45,510 over the same period. Average monthly EV payments climbed to $760, up $24 from a year earlier, even as automakers throw money at the problem.
Fewer Buyers Are Leasing Their Way Around It
One quiet casualty is EV leasing. Only 44% of EV transactions in January 2026 were leases, down a steep 30 percentage points from January 2025 — a sign that the commercial-lease workaround many buyers used to capture EV incentives indirectly has lost most of its power now that the underlying credit is gone.
Automakers Are Absorbing the Hit Themselves
$5,700 a Vehicle, and Climbing
With the government subsidy gone, automakers have started subsidizing EVs out of their own pockets just to keep them moving off lots. Average EV incentive spending reached $5,700 per vehicle, up more than $2,000 year-over-year — several times what non-EV incentives grew over the same stretch.
| Metric | EVs | Gas/Hybrid |
|---|---|---|
| Avg. transaction price | $51,981 (+18.1%) | $45,510 (+0.9%) |
| Avg. incentive per vehicle | $5,700 (+$2,000+ YoY) | $3,004 (+$403 YoY) |
| Jan. 2026 market share | 6.6% EV / 0.9% PHEV | 77.7% gas / 14.7% hybrid |
Total new-vehicle sales for January 2026 were projected at 1.12 million units, down 2.7% year-over-year, on roughly $39.7 billion in consumer spending — meaning the EV slowdown is landing inside a broader market that's already contracting, not one that's otherwise booming.
None of This Should Be a Surprise
Economists Called It Almost a Year Early
Back in November 2024, economists from UC Berkeley and Duke projected that ending the federal EV tax credit could cut EV sales by roughly 27% — a number partly grounded in what happened in Germany, where EV sales dropped 27% in the first ten months of 2024 after the government canceled a comparable $4,900 incentive. The US numbers so far — an EV-and-PHEV share drop of nearly four points, a pure-EV drop of nearly three — are moving in that same direction, even if they haven't matched the full 27% yet.
Executives Saw It Coming Too
Automaker leadership wasn't shy about its worries either. Nissan Americas Chairman Christian Meunier warned that "the EV market is going to collapse" once the credit disappeared, predicting brutal competition among dealers sitting on unsold inventory. Hyundai Motor North America CEO Randy Parker took the more measured view, arguing "there was an EV market before IRA, and there's going to be an EV market after IRA" — a bet that the segment survives, just smaller and pricier for now.
What to Watch Next
The real test is whether automakers can sustain $5,700-a-car incentive spending through the rest of 2026 without their EV programs becoming money losers, and whether hybrids keep pulling in buyers who've decided a plug isn't worth the higher price tag anymore. If the credit's absence keeps compounding the way this quarter's data suggests, the next post-mortem could show a market that shrinks further before it stabilizes. We'll keep tracking the numbers as they land.
-EditorZ
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