One year after Congress terminated the federal electric vehicle tax credit under the One Big Beautiful Bill Act on September 30, 2025, new EV sales have stabilized at five to six percent of the market while hybrid vehicles surge in popularity amid volatile fuel prices.
The Post-Credit Sales Slump and the New Market Normal
When Congress voted to dismantle the federal electric vehicle subsidy as part of the One Big Beautiful Bill Act, car buyers rushed showrooms to lock in the savings before the September 30, 2025, deadline. That final push drove market share to a peak of 11.4 percent in September 2025, according to data from Edmunds. Once the incentive vanished, the market corrected sharply.
Sales volume tumbled 36 percent in late 2025 compared to the previous year, followed by a 27 percent year-over-year decline in the first quarter of 2026. Yet industry analysts note that the anticipated market collapse failed to materialize. Instead of plummeting to zero, sales leveled off.
Throughout 2026, electric vehicles have steadily accounted for somewhere between 5 and 6% of all new car sales, according to Edmunds and Cox Automotive. That performance matches the baseline market share recorded when the Inflation Reduction Act initially expanded the credit in August 2022.
How the Section 30D and Leasing Rules Shaped the Boom
The expired federal framework originally offered a credit worth up to $7,500 for new vehicles, split evenly between critical mineral sourcing requirements and battery component manufacturing standards. Buyers also faced strict income caps, with single filers capped at $150,000 and married couples filing jointly at $300,000, alongside manufacturer’s suggested retail price limits of $80,000 for SUVs, vans, and pickup trucks, and $55,000 for sedans.
These restrictions created a massive loophole that drove consumer behavior toward leasing. Under commercial vehicle rules, leases bypassed assembly location caps and buyer income ceilings entirely.
Beyond federal incentives, affordability remains a persistent hurdle for retail buyers.
The Hybrid Surge in Massapequa and Nationwide
While the pure battery electric vehicle sector plateaus, gasoline-electric hybrids are enjoying a massive resurgence. Nationally, hybrid sales climbed nearly 27 percent over the past year, according to Edmunds data.
On dealership floors, demand has completely inverted traditional inventory patterns. At a Toyota franchise in Massapequa, New York, where Sal Iqbal has managed sales for nearly a decade, hybrid models like the Sienna minivan have turned into high-demand commodities.
We used to have to literally beg people to take a Sienna, and now we can’t keep them on the shelf. People are lining up for Siennas.
Sal Iqbal, general sales manager at a Toyota franchise in Massapequa, New York
Industry analysts point to a combination of factors driving buyers toward hybrids, including enduring sticker-price anxieties around pure EVs and macroeconomic pressures. With gasoline prices hovering around $4.50 per gallon nationally, and a geopolitical shock in March sparked by the United States entering a war in Iran, hybrid sales spiked as drivers sought fuel economy without range anxiety.