The US electric vehicle industry faces a bumpy road ahead

It’s a turbulent time for the American EV market.

On the one hand, the sector is coming off of record-high sales, and a bunch of newer, better models are becoming available. On the other hand, manufacturers are walking back their EV plans, anti-EV sentiments are spreading around, and President Donald Trump is taking a sledgehammer to the Biden administration’s pro-EV policies.

Despite the headwinds, analysts say that 2025 could be a strong year for EV sales in the U.S., building on what was a clearly — and perhaps unexpectedly — positive 2024 for EV adoption.

Let’s take a quick look back at last year’s successes, then see which factors will shape U.S. EV adoption in the year ahead.

2024’s biggest EV moments

The top line coming out of 2024 is that electric vehicle sales set another new record, even though some analysts predicted early in the year that sales could actually drop.

According to Kelley Blue Book, Americans bought a total of 1.3 million EVs last year, up 7.3% from 2023. Sales jumped more than 15% in the fourth quarter compared with the same period in the prior year, meaning the EV market finished 2024 with strong momentum. 

Interestingly, that increase in sales came despite a poor year for Tesla. The company’s sales were down nearly 38,000 units from the year before — its first annual drop in more than a decade. Yes, Tesla still sells the No. 1 and No. 2 most-popular EVs in the U.S. (the Model Y and Model 3, respectively), and it still owns nearly half of the American EV landscape. But just a few years ago, it owned around 80%.

Other EV makers fared better.

“By the end of 2024, 12 manufacturers reported year-over-year growth. General Motors, Hyundai Group, and Ford all experienced strong volume growth, each with more than 25,000 additional EV sales. Honda Group, which entered the EV market in spring last year, had an impressive debut with 40,408 sales,” said Stephanie Valdez Streaty, Cox Automotive’s director of industry insights.

2025 trends and projections

The theme of the year ahead is uncertainty.

The U.S. now has a new administration that’s going out of its way to roll back as many environmental mandates as possible, from nixing efficiency standards for low-flow shower heads to withdrawing from the Paris Agreement. Again.

But it also has newly minted Trump megadonor Elon Musk in the mix. He surely won’t want to make any moves that help his competitors, but he also won’t stand by as Trump tanks the American EV market … right?

Maybe. Musk has called for scrapping the $7,500 federal EV tax credit, and in Trump’s ​“Unleashing American Energy” executive order, the president directed federal agencies to consider eliminating ​“unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs.” He’s also already ditched Biden’s goal of EVs making up 50% of new vehicle sales by 2030, put unspent federal funding for chargers on ice, and indicated he’ll kill strict tailpipe emissions rules that would’ve pushed automakers toward EVs.

“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 (D) 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.