EV sales are way down. Here’s why that might not be a big deal.

Sales of electric vehicles have exploded.

Nationwide, dealers sold about 20% fewer used electric cars in October than in September and saw a staggering 50% drop for new cars, according to the latest data. Nobody was surprised. Congress voted in July to end federal tax credits that helped consumers pay for them on September 30, years before they expired. This led to a rush of buying before the deadline and a steep drop afterward.

The question now is whether this decline is a sign of a prolonged recession or just a blip in an otherwise upward trajectory. Although only time will tell, many analysts believe that electric vehicle adoption in the United States will continue to grow — although perhaps not at the same rate as before Congress cut the credits and automakers began second-guessing themselves.

“We’re definitely going to see a slowdown,” said Stephanie Valdez Streaty, director of industry research at Cox Automotive. The elimination of the federal credit of $7,500 on new electric vehicles and $4,500 on used vehicles certainly has harmful consequences. But the price of batteries, and therefore of cars, also continues to fall. Used models are also becoming more and more advantageous. Since this fall, the price gap between used electric vehicles and their gasoline equivalents has narrowed to just $900. In China, Valdez Streaty said, electric versions of cars often already cost less than their conventional counterparts.

“This is not going to stop,” she said of the dynamic in the United States. “Adoption will be gradual, but I still think we’re moving forward.”

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Even with this decline, electric vehicles are on track for record sales this year and represent about 8% of the overall market. That’s up from about 2.3 percent five years ago and a meager 0.66 percent a decade ago. Valdez Streaty expects this trend to continue, as does Liz Najman, director of market research at Recurrent, a company that provides data on electric vehicles. She said there would be a host of new, more affordable models, including revamped versions of the Nissan Leaf and Chevrolet Bolt, coming to market over the next year that should help drive demand.

By the end of 2026, about 16 electric models will be available for less than $42,000 new, compared to half that this year, Najman said. And, like Valdez Streaty, she points to continued downward pressure on second-hand prices, which is increasing adoption of this technology. Most notably, dealers have offered a slew of electric vehicle leases in recent years, and many of these cars are nearing the end of their lifespan and will soon hit used lots.

“There are a lot of options for people,” Najam said, optimistic about the industry’s prospects. Kathy Harris of the environmental nonprofit NRDC notes that electric vehicle owners don’t need to buy gasoline and avoid some basic maintenance like oil changes. This makes cars with cables more attractive. Overall, she said, “there are significant benefits to total cost of ownership, even with a higher upfront price.”

That said, the market certainly faces headwinds.

In addition to rescinding consumer tax credits, congressional Republicans also eliminated many manufacturing and other incentives for companies to make batteries or vehicles. They also attempted to undermine federal fuel economy and pollution standards, which encourage the production of low- or zero-emission vehicles. In that same bill, for example, Congress removed penalties for manufacturers who violate Corporate Average Fuel Economy, or CAFE, standards. This allows companies to produce more profitable but less fuel-efficient vehicles, such as SUVs and pickup trucks, without fear of being fined. Under President Donald Trump, the Environmental Protection Agency also revoked California’s waiver to set its own emissions standards.

A number of these changes are currently the subject of litigation (California, for example, sued the Trump administration to preserve its exhaust rules), and analysts are following these cases closely. The same goes for Trump’s drastic tariffs, which have also put upward pressure on the cost of all new vehicles. Electric vehicles could be particularly affected, as batteries typically come from overseas and can represent up to 40% of the car’s value.

All this uncertainty has led several manufacturers to announce setbacks in their electric vehicle projects. But Najman points out that many also stood their ground; she particularly criticized Hyundai for expanding its electric vehicle offerings. “These are companies that have already made their commitment to electric vehicles clear, both in terms of words and actions,” she said. This incident “isn’t really going to slow down their success.”

Some states are trying to step in to fill the void left by the federal government. Since these credits disappeared, Colorado and Connecticut have increased their credits or rebates (by $3,000 and $500, respectively). In total, Valdez Streaty said, 17 states offer incentives for purchasing electric vehicles. And, aside from the United States, Harris believes that manufacturers will continue to produce more electric vehicles and at lower costs, because that’s what customers in the rest of the world want as well.

“Clearly that’s still where the market is going,” she said. “I’m hopeful.”