As many analysts predicted, U.S. electric vehicle sales dropped sharply in the fourth quarter after reaching record highs in Q3. The downturn followed the expiration of government-backed purchase incentives at the beginning of October, which had helped fuel earlier demand. As a result, EV sales in Q4 fell to just 234,000 units—down 46% from Q3 and 36% year over year—marking the weakest quarterly performance since Q4 2022.
While the Q4 decline is likely to dominate headlines, the full-year picture for 2025 tells a more nuanced story. Buoyed by an exceptional third quarter, total U.S. EV sales for the year came in just below 2024’s record of 1.30 million units. In fact, 2025 stands as the second-strongest year ever for EV sales in the U.S. EVs accounted for 7.8% of all new-vehicle sales, only slightly below the 8.1% share recorded in 2024, according to estimates from Kelley Blue Book.
“2025 unfolded largely as anticipated, with changes to federal EV incentives reshaping the demand patterns that drove record Q3 sales,” said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive. “Rather than signaling a retreat from electrification, this shift reflects a structural transition toward a market increasingly driven by consumer choice. While challenges lie ahead in 2026, momentum remains rooted in market maturation—broader model availability across price points, improving charging reliability, and continued gains in battery performance and cost.”
Tesla continues to dominate the U.S. EV market despite a second consecutive annual sales decline following its 2023 peak. Nearly half of all EVs sold in the U.S. are Teslas, led primarily by the Model 3 and Model Y. In 2025, Tesla delivered 589,000 vehicles, a 7% drop from 2024, representing a decline of roughly 44,000 units.
While Tesla’s volumes slipped, General Motors gained significant ground. GM sold more than 150,000 EVs in 2025, a 48% increase year over year, capturing approximately 13% of the U.S. EV market. Chevrolet and Cadillac spearheaded the company’s momentum with several well-received models. Although GM’s total sales still trail Tesla by a wide margin, the automaker has firmly established itself as the leading EV manufacturer outside of Tesla—effectively securing the No. 2 spot.
The Next Chapter Begins
EVs reached their highest share of total U.S. new-vehicle sales in Q3 2025 at 10.5%, before falling back to 5.8% in Q4—a level comparable to the first half of 2022. Looking ahead, Cox Automotive expects EV market share to stabilize around 8% as new models arrive, charging infrastructure improves, and consumer confidence in EV technology continues to strengthen. Upcoming vehicles such as the affordable 2026 Chevrolet Bolt, the Rivian R2, and a new generation of BMW EVs—highlighted by the soon-to-launch BMW iX3 SUV—are expected to shape the next phase of EV adoption in the U.S.
Government policy remains a key uncertainty. Recent signals from the current administration suggest a reduced regulatory push on fuel economy and emissions, placing more responsibility for growth on automakers and consumers. Even so, Cox Automotive expects EV sales to rise over the long term. With ongoing innovation and steady infrastructure investment, the U.S. auto market—more than a century old—is likely to become increasingly electrified over the coming decade. Change, as history shows, takes time.
