The electric vehicle (EV) market in the United States is facing a significant shift following the expiration of the $7,500 federal EV tax credit. This incentive, which helped make electric cars more affordable for consumers, expired on September 30, 2025. Its removal is expected to reduce EV demand and likely lead to higher real prices for electric cars. The tax credit was initially enacted to accelerate EV adoption but was ended under the current administration’s fiscal policies.
Despite this setback for EVs overall, Ford Motor Company (NYSE: F) is experiencing a notable increase in sales of electrified vehicles, driven primarily by hybrids. According to recent reports, Ford recorded electrified vehicle sales totaling 156,000 units in the first half of 2025, with hybrid sales growing 27% year-over-year. Models such as the F-150 Hybrid and Maverick Hybrid are popular choices catering to buyers who prefer the flexibility of hybrid powertrains over fully electric vehicles. This trend is reflected in August 2025 sales data where Ford saw an increase of 14.5% in hybrid vehicle sales compared to August 2024. Ford’s CEO Jim Farley recently commented that the US EV market might contract to only 5% of new vehicle sales due to policy shifts, including the tax credit expiration and relaxed emissions rules. In response, Ford plans to increase hybrid production and pursue affordable EVs below $30,000 in the longer term, though these models will not be available until 2027.
Tesla Inc. (NASDAQ: TSLA), long a dominant player in the U.S. EV market, has adjusted to the post-tax-credit environment by raising lease prices for its vehicles. The Model Y’s monthly lease rates increased by $50, with the Model 3’s monthly lease increasing by $80. These are the first leasing price increases in several months and come directly after the federal tax incentive ended. Tesla has left purchase prices unchanged but made it clear that to qualify for any remaining tax benefits, customers needed to take delivery before the end of September. Lease pricing hikes reflect the loss of the $7,500 credit that automakers had been passing along to consumers in the form of discounts and incentives.Â
The expiration of the tax credit has introduced uncertainty and challenges for the broader EV market. Many automakers are assessing how to adjust vehicle prices and incentive programs to maintain demand. Without the federal subsidy, EV sales are expected to fall sharply in the last quarter of 2025. This comes after a surge in sales during August and September, as many consumers rushed to lock in purchases before the tax credit expired. Historical precedent also suggests a potential price adjustment and discounting, as seen in 2019 when Tesla and General Motors responded to a prior expiration of EV credits by cutting prices.
Ford’s emphasis on hybrid vehicles amid this transition highlights a broader industry pivot. While pure electric vehicle sales are facing headwinds, hybrids provide a gateway for consumers still weighing electric versus combustion choices. Ford’s hybrid sales gains suggest there remains significant demand for electrified vehicles, even when full EV incentives disappear.
Tesla’s leasing price increases and the tax credit expiration overall foreshadow a potentially quieter period for EV sales in the near term. Automakers will likely continue to monitor inventory levels and adjust production accordingly, with some reducing new EV assembly or shelving select electric models temporarily. The evolving policy landscape and market dynamics underscore the need for innovation and adaptability as EV adoption matures.Â
The US electric vehicle market is at a crossroads. The removal of the federal EV tax credit is a significant shift, with immediate impacts on pricing and sales volume. Ford’s growth in hybrids indicates there is still strong consumer interest in electrified vehicles, albeit with more complexity in consumer choice. Meanwhile, Tesla’s lease rate adjustments illustrate the cost pressures brands face without government incentives. The coming months will clarify how these factors reshape buying behavior and industry strategies going forward.
