Hello from Editor Z. The federal $7,500 EV tax credit expired on September 30, 2025, and the executives who build these vehicles weren't shy about what they expected next. Now the first full quarter without it is in the books, and the Q1 2026 EV sales numbers land somewhere between those warnings and the calmer read some analysts are now offering: sales fell roughly 27% year-over-year, but the quarter-over-quarter trend suggests the steep slide may already be leveling off.
What Executives Predicted Before the Credit Died
Last fall, as the September 30 deadline approached, carmaker leadership was blunt about the risk. Ford CEO Jim Farley called the credit's removal "a game-changer," predicting EV sales could fall to around 5% of total U.S. vehicle sales in October — roughly half of the elevated share the industry saw in August, when buyers rushed to lock in the incentive before it disappeared.
Nissan's "Collapse" Call
Nissan Americas Chairman Christian Meunier went further, saying flatly: "The EV market is going to collapse in October." Dealers echoed the concern, worrying about getting stuck with unsold inventory, particularly on pricier models like GM's Chevy Silverado EV, which tops $90,000. A joint study from UC Berkeley, Duke, and Stanford researchers projected a 27% decline in EV registrations once the incentive was gone — a number that, as it turns out, was close to the mark.
What Q1 2026 Actually Showed
According to Cox Automotive data cited by Kelley Blue Book, Americans bought 216,399 EVs in Q1 2026, down 27% from Q1 2025. That's a steep drop, and it lines up almost exactly with the academic forecast from before the credit expired — so on the headline number, the pessimists were largely right.
Market Share Slide
EVs made up 5.8% of new vehicle sales in Q1 2026. That's a sharp fall from the 10.6% share EVs hit in Q3 2025, when the pre-deadline buying rush inflated demand, but it's also close to the roughly 5% figure Farley predicted for the post-credit period. In that narrow sense, his call held up better than the word "collapse" suggests it should have.
The Leveling-Off Signal
Here's where the picture gets more interesting than the fall forecasts implied. Kelley Blue Book's analysis found that Q1 2026 sales were only 7.8% below Q4 2025 — a far smaller drop than the year-over-year comparison suggests, and a sign that the initial shock has mostly worked its way through the market. EV share also held flat at 5.8% between Q4 2025 and Q1 2026, rather than continuing to slide.
A Cox Automotive Read
A Cox Automotive director of industry insights described it as the market entering "a new phase," where sales slowed and share shifted downward but then found a new, lower baseline rather than continuing into a freefall. That's a meaningfully different story than the "collapse" language from Nissan's Meunier — the market dropped hard once, then stopped dropping as fast.
Tesla Still Leads the Pack
Even in a shrunken market, the Tesla Model Y remained the single best-selling EV, moving 78,591 units in Q1 2026 — roughly one in three EVs sold in the U.S. that quarter. That concentration matters: when one model accounts for a third of a shrinking category, the health of the broader EV market is still riding heavily on Tesla's ability to keep moving volume without the credit's price cushion.
The Used-EV Wrinkle
One side effect getting less attention than the new-car numbers: the $7,500 credit had been propping up used EV affordability by accelerating depreciation on new models, which fed cheaper used inventory. With that incentive gone, the pipeline of steeply discounted used EVs is expected to thin out over time, which could make the used market — long seen as the more accessible entry point for EV buyers — a harder sell than it was over the past couple of years.
Where This Leaves the Industry
Automakers haven't stood still. Hyundai, for one, has been offering discounts of up to $9,800 on select models to soften the blow, and other brands have leaned on lease structures that can still capture some tax benefit. Whether that kind of manufacturer-funded discounting becomes permanent, or fades once inventory clears, will say a lot about whether the "new baseline" Cox Automotive describes is actually stable or just a pause before another leg down. Q2 2026 data will be the real test of which story holds.
-EditorZ
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