The latest report from Cars.com’s Industry Insights highlights a complex picture of the EV market in the face of impending tariffs and the end of EV tax credits. Despite a 6.6% year-over-year increase in new-vehicle sales, dealers are seeing a decline in inventory for the first time since 2022. This surge in sales is largely attributed to consumers rushing to make purchases before tariffs and policy changes drive prices up. The imminent expiration of the federal $7,500 tax credit for EVs on September 30 has also added a sense of urgency for buyers.
While there are currently 75 EV models on the market – a 27% increase from last year – the growth in new EV inventory has slowed to just 9% year-over-year. This slowdown, coupled with the high prices of most new EVs in the premium-to-luxury segment, suggests that demand may cool once the tax credit expires.
Automakers have been absorbing significant tariff costs to keep prices stable, but this is not sustainable. Analysts predict that these costs will eventually be passed on to consumers, leading to price increases of thousands of dollars on the same vehicles. For instance, at the current 25% tariff levels, the average new-vehicle price could rise from $48,000 to $54,400.
In light of these challenges, the used EV market is gaining traction. Inventory of used EVs has increased by 33% year-over-year, with average prices dropping to $36,000. Affordable models priced under $25,000, such as the Tesla Model 3, Nissan Leaf, and Chevy Bolt EV, are selling 20% faster than average. Additionally, many of these used EVs qualify for a $4,000 tax credit, which is also set to expire on September 30.
As consumers navigate the changing landscape of the EV market, it’s clear that both new and used options present opportunities and challenges. The looming impact of tariffs and the end of tax credits will undoubtedly shape the future of EV sales in the coming months.
