How will EVs perform in the US following incentive expiration?

23 October 2025

The electric vehicle (EV) share of new-car sales in the US is forecast to fall this month after incentives expired in September. J.D. Power unpacks its latest market expectations, including the impact on the different powertrains.

New-vehicle sales for October 2025, including retail and non-retail transactions, are projected to reach 1,249,800 units, a 6.9% year-on-year decrease. This month has 27 selling days, the same as October 2024.

The seasonally-adjusted annualised rate (SAAR) for total new-vehicle sales is expected to reach 15.1 million units, down 1.1 million units from October 2024. New-vehicle retail sales are projected to hit 1,051,400, a 5.9% year-on-year drop.

Expected but notable decline

‘October’s results reflect a notable, but expected decline in the new-vehicle sales pace, due almost entirely to sales of electric vehicles,’ said Thomas King, president of the data and analytics division at J.D. Power.

The expiration of federal EV credits on 30 September caused shoppers to pull their electric vehicle purchases forward. This drove a significant increase in sales and inflated the overall sales pace. In September, EVs accounted for 12.9% of new-vehicle retail sales, the highest ever, and well above the 8.5% recorded a year earlier.

Now that the federal EV credit has expired, the industry is dealing with the consequences of the accelerated purchases. In October, EVs represent just 5.2% of new-vehicle retail sales. On a volume basis, the technology is forecast to account for one million of the 1.2 million-unit decline in the industry sales pace compared with a month ago.

‘Despite the sharp deterioration in EV sales, the decline could have been worse. Actions by multiple manufacturers to reduce EV prices and increase discounts to offset the loss of the federal credit are helping to maintain EV affordability, thereby preventing an even larger decline in EV sales,’ King added.

For non-EVs, elevated transaction prices and restrained incentives are also contributing to the softer sales pace. Affordability pressures remain, with monthly finance payments reaching a record for the month of October at $758 (€653).

In response, more consumers are turning to extended 84-month loan terms, which are expected to account for 11.8% of financed sales this month. This is the second-highest level on record for the month of October.

Incentive impact

The change in EV sales mix is also affecting average transaction prices and average incentive spending. The average new-vehicle retail transaction price in October is expected to reach $46,057, up $994 (2.2%) from October 2024.

The average manufacturer incentive spend per vehicle is on track to reach $2,674, a decrease of $540 from September and a decrease of $444 from a year ago. Expressed as a percentage of manufacturer’s suggested retail price (MSRP), incentive spending is currently at 5.3%, down a percentage point (pp) from a year ago.

‘The decline in manufacturers’ incentive spending is due almost entirely to reduced EV sales, since EVs typically have much higher discounts than non-EVs,’ King commented. While the EV mix of industry is down, discounts on these models have increased to $13,161, up $2,211 from October 2024 and up $2,047 from September 2025, as manufacturers step in to replace some portion of the expired tax credit.

Discounts on non-EVs were $2,423 in October, down $282 from a year ago. While the decline in EV sales hurts manufacturers’ revenue performance, the mix shift to more profitable non-EVs, sold with lower incentives, is a positive for profitability.

‘Also, there are some positives for new-vehicle demand. Interest rates have edged lower and used-vehicle prices remain strong, thereby helping consumers with a trade-in,’ he added. The average interest rate for new-vehicle loans in October is 6.56%, a decrease of 14 basis points (one basis point is equal to 0.01%) from a year ago.

Used-car prices on the rise

‘The average used-vehicle price is trending toward $29,446, up $473 from a year ago. This reflects the combination of reduced supply of recent model-year used vehicles due to lower new-vehicle production during the pandemic, fewer lease maturities and manufacturers moderating discounts,’ King said.

The rise in used-vehicle prices is good news for new-vehicle buyers. A trade-in, as average trade-in equity, was up $386 in October to $8,378. That increase is partially offset by higher loan balances on vehicles being traded in. The number of new-vehicle buyers with negative equity on their trade-in is expected to reach 26.6%. This is an increase of 2.2pp from October 2024.

Elevated transaction prices in October are not enough to offset the lower sales pace, with consumers on track to spend nearly $46.1 billion on new vehicles this month. This is 4.2% lower than a year ago. Total retailer profit per unit, which includes vehicle gross plus finance and insurance income, is expected to be $2,295, up $97 from October 2024 and $137 from September 2025.

The improvement in retailer profit per unit is primarily a function of lower EV sales, which typically generate lower retailer profits than non-EVs. Total aggregate retailer profit from new-vehicle sales for this month is projected to be $2.3 billion, down 2.1% from a year ago.

Restrained manufacturer incentive spend

‘Looking ahead, the industry continues to navigate a complex mix of tariff-related cost pressures, challenging consumer affordability and EV-related disruption. November traditionally marks the beginning of the holiday sales event season, a period that typically features elevated manufacturer-backed promotional activity, including enhanced leases,’ King commented.

However, the number of leases set to expire in November and December is projected to be nearly 15% lower than the same period in 2024 and 48% lower than in 2023.

‘Throughout 2025, manufacturer incentive spending has been restrained, particularly in the now even more important non-EV segments. As manufacturers balance profitability with volume, the trajectory of sales will depend on how aggressively they choose to stimulate demand, especially during the holiday sales period. For now, most indicators point to relatively conservative strategies for the balance of the year,’ he concluded.

Sales details

• Fleet sales are expected to total 198,412 units in October, down 12.1% from October 2024. Fleet volume is expected to account for 15.9% of total light-vehicle sales, down 0.9pp from a year ago.
• Internal-combustion engine vehicles are projected to account for 79.2% of new-vehicle retail sales, an increase of 2.4pp from a year ago. Plug-in hybrids (PHEVs) are on pace to make up 1% of sales, down 1.4pp from October 2024, while EVs are expected to account for 5.2% of sales, down 3.4pp year on year. Full hybrids are expected to account for 14.2% of new-vehicle retail sales, up 2pp.
• US final assembly vehicles are expected to make up 56.7% of sales in October, up 5.5pp from a year ago.
• Trucks and SUVs are on pace to account for 82.3% of new-vehicle retail sales, up 1.3pp from October 2024.

Retail details

• Retail inventory levels are currently at 2.27 million units, an 11.5% increase from October 2024.
• The industry’s inventory days of supply are 61 days in October, up from 59 days a year ago.
• The average new-vehicle retail transaction price in October is expected to reach $46,057, up $994 from October 2024. Transaction price as a percentage of MSRP rose to 90.5%, up 0.7pp from a year ago.
• Retail buyers are on pace to spend $46.1 billion on new vehicles, down $2 billion from October 2024.
• Average incentive spending per unit in October is expected to reach $2,674, down $444 from October 2024. Incentive spending as a percentage of the average MSRP is expected to decrease to 5.3%, down 1pp point from October 2024.
• Average incentive spending per unit on trucks and SUVs in October is expected to be $2,798, down $473 from a year ago, while the average spending on cars is expected to be $2,068, down $350 from a year ago.
• Leasing is expected to account for 20.5% of sales this month, down 2.7pp from a year ago.

Dealer details

• The average time a new vehicle remains in the dealer’s possession before sale is expected to be 49 days in October, down from 50 days a year ago.
• 29.3% of vehicles sold in less than 10 days in October, down 1.8pp from a year ago.
• Average monthly finance payments are on pace to be $758, up $21 from October 2024. The average interest rate for new-vehicle loans is expected to be 6.56%, down 0.14pp from a year ago.
• So far in October, average used-vehicle retail prices are $29,446, up $473 from a year ago. Trade-in equity is trending towards $8,378, which is up $386 from a year ago.
• 26.6% of trade-ins are expected to carry negative equity this month, an increase of 2.2pp from October 2024.
• Finance loans with terms greater than or equal to 84 months are expected to reach 11.8% of finance sales this month, up 2.2pp from October 2024.

Calculating market correction

‘The automotive industry is experiencing a significant recalibration in the EV segment in the first month following the expiration of the federal tax credits. October EV market share declined to 5.2% month-to-date, less than half of September’s 12.9%, signalling a notable shift in consumer demand and market dynamics,’ said Tyson Jominy, senior vice president of data and analytics at J.D. Power.

PHEVs are facing the steepest decline, with market share going from 2.2% in September to just 1% in October. As a result, carmakers and consumers are turning their attention to traditional hybrids, which have gained traction. The hybrid market share has risen to 14.2% month-to-date, up 2pp from last October, a near all-time high.

‘While hybrid growth is encouraging, the recent EV market correction underscores a critical lesson: consumers prefer having access to a range of powertrain options that deliver comparable value. A singular focus on any one technology, be it EVs or hybrids, risks repeating past missteps. A diversified strategy that embraces multiple powertrain solutions will be essential to meeting evolving consumer preferences,’ Jominy concluded.