In 2025, one in four cars sold anywhere in the world was electric. However, in the US, that figure is closer to one in ten, and it is not moving in the right direction.
The falling EV prices globally have pushed sales to record levels. American buyers, on the other hand, are marching through 2026 with fewer incentives, higher prices, and a shrinking selection of affordable options.
How bad is the EV situation in the US?
The IEA’s Global EV Outlook 2026, released May 20, puts the global picture in sharp relief.
Electric car sales exceeded 20 million units in 2025, growing 20% from 2024. On average, EV battery prices dropped 8% due to lower raw material costs and wider adoption of lithium iron phosphate chemistry.
Contrary to the global trends, US sales went the other way, slightly down year-on-year. But it is when you look at the last quarter of 2025, which recorded 45% lower new EV sales than the same period in 2024, that you realize how grim the picture is.
Why is the US falling behind on EV affordability?
The biggest reason behind the declining sales is the recent policy changes. The One Big Beautiful Bill Act eliminated tax credits for new and used EV purchases after September 2025. It also removed penalties for automakers that fail to meet fuel efficiency standards, essentially reducing the industry’s financial incentive to prioritize EVs.
Then there’s the 100% important duties on Chinese EVs, even the affordable ones, which are among the world’s most affordable and dominate sales across Latin America, Southeast Asia, and Europe. These are practically unavailable to American buyers.
Finally, it’s the preference for large vehicles that is keeping prices out of reach for many buyers. The report mentions that more than 85% of EV models available in the US are SUVs or other large vehicles. These come with bigger batteries, which cost more, pushing the average EV price higher.
The US seems to be doubling down on premium and heavy EVs, but in other markets like Europe, small EVs are expanding rapidly. Vietnam, where EV penetration exceeded 40% in 2025 driven by VinFast’s affordable small models, illustrates exactly what accessible pricing can achieve.
The impact is also visible is the Big Three’s EV strategy
Faced with slower-than-expected consumer demand, shifting federal policy, and profitability pressures, the Big Three automakers have already scaled back their fully electric vehicle plans. Instead, they’re pivoting toward plug-in hybrids, traditional gas-electric hybrids, and ICE trucks.
For instance, Ford scrapped its three-row electric SUV, absorbing a $400 million write-down. The company has also pulled the plug on its all-electric F-150 Lightning. Instead, it is reinventing it as a range-extended electric vehicle (EREV), that will provide over 700 miles of range.
| Automaker | Previous Ambition | Current Strategy |
| Ford | Aggressive EV scaling (Three-Row EV, T3 Truck) | Scrapped 3-row EV; hybrid options for all gas models |
| General Motors | All-electric lineup focus | Reduced EV production; reintroducing plug-in hybrids (PHEVs) |
| Stellantis | Rapid transition to pure BEV platforms | Focus on gas-extended EVs (Ramcharger) and 4xe plug-in hybrids |
General Motors has also reduced its short-term EV production target, abandoning its goal of reaching a one-million-unit EV manufacturing capacity. The automaker is redirecting its manufacturing capacity to prioritize the production of gas-powered trucks and SUVs.
Stellantis is also focusing on multi-energy vehicles. While the IEA report highlights how consumers are responding to the less favorable scenario in the EV market, the Big Three’s pivot away from pure EVs reflects the shift in demand.
