Dan J. Harkey

Master Educator | Business & Finance Consultant | Mentor

The EV Bust: How Policy Shifts and Consumer Fatigue Sparked a Market Correction

The Policy Whiplash Government incentives were the backbone of EV adoption in the U.S. For years, tax credits and state rebates have narrowed the price gap, signaling a long-term commitment to electrification. When those incentives expired in late 2025, the market lost its safety net overnight. Automakers had scaled production based on a demand curve that assumed continued policy support—only to face a sudden cliff.

by Dan J. Harkey

Share This Article

Summary

Policy volatility doesn’t just affect prices; it erodes consumer confidence. Buyers hesitate when they fear today’s savings will vanish tomorrow or when emissions rules swing with political cycles. EV adoption thrives on predictability, and currently, predictability is lacking, highlighting the crucial role of stable and predictable policies in maintaining consumer

Introduction

For years, electric vehicles (EVs) were the darlings of the auto industry—a symbol of innovation, sustainability, and government-backed progress.  Automakers poured billions into EV platforms, and policymakers sweetened the deal with generous tax credits.  However, as those incentives wane and consumer enthusiasm wanes, the U.S. EV market faces its first major reckoning: a glut of unsold cars, production slowdowns, and a sobering reality check on adoption timelines.  This has led to a significant Impact on automakers, with inventories ballooning and Q4 sales forecasts plummeting.

The Incentive Cliff

The federal tax credit of up to $7,500 for new EVs and $4,000 for used EVs was a cornerstone of U.S. electrification policy.  When those credits expired in late 2025, the price gap between EVs and gas-powered cars widened overnight.  With EVs averaging $57,000 versus $48,000 for gas cars, the economic case for switching evaporated for many buyers.

Automakers anticipated a surge before the deadline—and got it.  September saw record EV sales as consumers rushed to capture the last credits.  But that boom was followed by a bust: inventories ballooned, and Q4 sales forecasts plunged.

The Glut and the Pullback

Ford and GM now sit on thousands of unsold EVs. Both tried creative leasing strategies to keep credits alive, but abandoned them under regulatory pressure.  Discounts and zero-percent financing are the new norm.

Meanwhile:

  • GM wrote down $1.6 billion and delayed the introduction of new EV models.
  • Ford has postponed the launch of its next-generation EV trucks and vans.
  • Stellantis canceled its electric pickup and pivoted to hybrids.

The message is clear: automakers are recalibrating expectations.

Consumer Sentiment: From Curiosity to Caution

Surveys tell the story:

  • AAA reports only 16% of Americans are likely to buy an EV, the lowest since 2019.
  • Gallup finds just 8% are seriously considering an EV, down from 12% two years ago.  Top concerns:
  • Battery repair costs.
  • Charging infrastructure reliability.
  • Range anxiety.
  • Political polarization—EV adoption is now a partisan issue.

Why the Market Misread

Automakers bet on a straight-line adoption curve.  Instead, they hit a wall:

  • Charging infrastructure remains patchy and unreliable.
  • Battery costs are falling, but not fast enough to erase the price gap.
  • Policy volatility—from incentives to emissions rules—creates uncertainty for both buyers and manufacturers.

Global Contrast

While U.S. demand cools:

  • China dominates with ultra-cheap EVs and rapid charging tech.
  • Europe maintains momentum thanks to strict emissions rules and sustained subsidies.  The U.S., by contrast, now projects 50% EV adoption by 2039—five years later than previous forecasts.

What’s Next?

Expect:

  • Discount wars as automakers clear inventory.
  • A surge in hybrid models as a compromise solution.
  • Growth in the used EV market as lease returns flood the supply.
  • Slower, messier electrification—unless policy support returns.

Closing Thought

The EV revolution isn’t dead—but it’s hitting reality.  Without incentives and infrastructure, adoption will be evolutionary rather than explosive.  For automakers and policymakers, the lesson is clear: markets don’t run on ideology—they run on economics and convenience.