EV sales are barreling toward a record finish in Q3—but the rest of the year looks murky for battery-powered vehicles.
That’s because consumers are racing to take advantage of lucrative deals on electric models that are only available until the Sept. 30 expiration of federal EV tax credits that offer buyers up to $7,500 in incentives.
“Despite initial concerns that EV inventory could be a bottleneck, inventory is now more likely an albatross,” Tyson Jominy, SVP of data and analytics at JD Power, said in a statement.
“There are 197,000 EV units on the ground, down just 10,000 from July, and a robust 59-day supply,” he added. “Yet, like Cinderella’s magic, this brilliance faces a deadline—when the clock strikes midnight on Oct. 1, the $7,500 federal support vanishes, threatening to turn this inventory into costly pumpkins for automakers and dealers.”
Records galore: General Motors reported that its US EV sales “likely set an all-time monthly record in August, as customers rushed to make purchases ahead of” the tax credits’ expiration. The Detroit automaker (which doesn’t report sales totals on a monthly basis and will share Q3 numbers in October) sold more than 21,000 EVs across its Cadillac, Chevy, and GMC brands.
“We’re expecting strong demand once again in September,” Duncan Aldred, SVP and president of North America for GM, said in a blog post. “The question, of course, is what’s next? There’s no doubt we’ll see lower EV sales next quarter after tax credits end September 30, and it may take several months for the market to normalize.”
“We will almost certainly see a smaller EV market for a while, and we won’t overproduce,” he added. “Still, we believe GM can continue to grow market share.”
On that note: GM is cutting production at its EV plant in Spring Hill, Tennessee, in December, and delaying a second shift to produce the electric Chevy Bolt at a plant near Kansas City, Reuters reported Thursday.
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Meanwhile, Kia reported record monthly sales, up more than 10% YoY, boosted in part by record-setting sales of the electric EV9. Sister brand Hyundai also had an all-time best August performance, with sales up 12% YoY and EV sales up 72% YoY.
American Honda reported its best-ever electrified vehicle sales in August, and noted that record monthly sales of the all-electric Prologue came “as buyers rush to complete sales ahead of the [Inflation Reduction Act] incentive expiration.” Ford’s EV sales grew 19.3% YoY and hybrids jumped 14.5%.
Looking ahead: The federal incentives, which include a $7,500 tax credit on certain new EV models and a $4,000 credit on eligible used EVs, are going away under President Donald Trump’s tax and budget bill.
Analysts at JD Power predicted that the end of the tax credits would help lift new-vehicle sales more than 8% YoY in August. They also projected an all-time high EV market share of 12%, up from 9.5% a year ago.
On average, automakers were offering incentives of $6,700 per unit on EVs, $1,500 more than in July, sending average prices of EVs down $2,500 to $44,300—lower than the average price of $45,700 for ICE vehicles, per JD Power.
Cox Automotive analysts expect Q3 to surpass the previous record of 356,000 EV sales in Q4 2024, then to decline.
“Sales of EVs will likely fall dramatically when tax credits expire,” Charlie Chesbrough, senior economist at Cox, said in a statement, “and market conditions for other vehicles will become more challenging in future months.”