“If the IRA tax incentives were removed, it would impact EV sales, as price is the main barrier to adoption. These incentives have been crucial in reducing the price premium,” Valdez Streaty said. As a case in point, after the German government ended its incentives in 2023, EV sales fell nearly 30% in 2024.
Whether Trump’s moves are fully legal remains to be seen. Organizations like the Natural Resources Defense Council are already preparing for legal action. And Valdez Streaty said other levers exist to keep adoption climbing.
“Manufacturers could continue to offer attractive financing and leasing deals on EVs. Additionally, state incentives could help fill the gap,” she said. California Gov. Gavin Newsom said he would reinstate a state EV incentive if Trump eliminates the federal tax credit.
Analysts are still reasonably optimistic about the EV market, even with the uncertainty.
Cox Automotive’s 2025 outlook report predicts that 25% of U.S. car sales in 2025 will be EVs or hybrids, with full EVs climbing to 10%. That’s up from 7.5% last year.
Helping boost this growth is the fact that automakers are introducing more EVs, driving competition and consumer choice. Cox Automotive expects 15 new electric models to enter the American market this year, including the Jeep Recon EV and Audi A6 e-tron.
That’s good for consumers but not so good for more established industry players with aging product portfolios. Tesla vehicles, in particular, have mostly lacked significant updates in years. The exception to that, of course, is the Cybertruck, which began hitting the roads in late 2023.
“Manufacturers that performed well last year are likely to maintain their momentum,” Valdez Streaty said. “Manufacturers with new models set to launch have the opportunity to capture even more market share. This diversification in the market could help sustain overall growth despite Tesla’s recent struggles.”
Another major factor affecting EV adoption is charging availability. More chargers mean more buyers feel comfortable going electric, and we’ve seen a huge improvement in this area lately.
According to Cox Automotive Chief Economist Jonathan Smoke, public charger availability has increased by 40% in the past two years. “Like EV adoption, the charging network’s expansion is slow and bumpy; but the trajectory is clear. And in 2025, we expect further expansion of both,” he said in a December forecast.
The fact that the auto industry is continuing to adopt Tesla’s North American Charging Standard also helps. More cars using the same plugs and having access to the Tesla Supercharger network will, again, reduce one of the major pain points for EV owners.
“This significantly expands the available charging options for current and future EV owners. It also enhances consumer confidence,” Valdez Streaty said.
So buyers will have more and better cars to choose from, with more and better places to charge them. That’s all good. But both they — and automakers — are likely to have fewer government incentives to go electric, which is not ideal. Whether the good outweighs the bad and delivers another year of record-setting EV sales remains to be seen.
