Updated October 7, 2026, 1:36 p.m. ET
- A law signed by President Donald Trump eliminated the $7,500 federal tax credit for electric vehicles in September 2025.
- Since the tax credit was eliminated, sales of electric vehicles have fallen while sales of hybrids have surged.
- Automakers are now focusing more on hybrid models to attract consumers concerned about high gas prices.
It’s been more than a year since electric vehicle buyers in the United States could take advantage of the federal government’s popular $7,500 tax credit for plug-in models, which was phased out at the end of September 2025.
This tax credit, which was first passed during the administration of former President George W. Bush in 2008 to boost the adoption of electric vehicles, was eliminated on September 30, 2025, by a law passed by congressional Republicans and signed by President Donald Trump.
Electric vehicle sales have fallen since then, although a surge in gasoline prices this year led to something of a renaissance for plug-in models in 2026. The elimination of electric vehicle tax credits also had impacts on other sectors of the industry: Automakers canceled production of several low-selling electric models that they could no longer market at deep discounts.
As consumers sought fuel-efficient models in the wake of average gasoline prices surpassing $4 a gallon, hybrid vehicles saw a sharp resurgence in interest as automakers moving away from electric vehicles introduced them to gasoline-price-conscious consumers.
Automakers have sold more than 12 million new cars so far in 2026, a pace similar to their pace in the first nine months of 2025, according to Cox Automotive. Only about 6% of those new car sales this year were electric cars, although sales of used electric vehicles have increased in recent months, according to the group.
Jeremy Robb, chief economist at Cox Automotive, said during a briefing on his organization’s third-quarter automaker sales forecasts that there is currently a “tug of war” shaping auto demand.
“On the headwind side, rising gasoline and fuel prices are forcing consumers into difficult trade-offs: When energy costs rise, people prioritize essential spending and push big-ticket purchases, like a vehicle, further down the list,” he said.
“On the tailwind side, we are seeing strong growth in liquid assets – savings, money market and stock holdings outside of 401(k) and IRA accounts have grown at double-digit rates in recent years, bolstering purchasing power, especially for higher-income buyers,” Robb continued.
With that in mind, the USA TODAY Cars team looked at how the rest of the U.S. auto market is faring a year after Trump eliminated federal tax credits for electric vehicles and what buyers can expect in the future.
Why are car buyers increasingly turning to hybrids?
Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive, added during the same briefing that the biggest beneficiaries of changes in gasoline prices and the amount of subsidies available for electric models have been hybrids.
“Hybrid vehicles continue to be the clearest growth model in the electrified market,” she said, adding that hybrid car sales volume increased by 23% between the second quarter of 2025 and the second quarter of 2026.
Valdez Streaty said the rise pushed hybrids’ share of the U.S. auto market to a record 16.3 percent, up from 13.0 percent a year ago.
“For consumers, hybrids offer better fuel efficiency without requiring a major change in how they fuel or use their vehicle,” she said.
Valdez-Streaty noted that several automakers like Toyota, Kia and Hyundai already had several hybrid cars in their model lineup that they could market to consumers who didn’t want to go all-electric, even though gasoline prices prompted a search for more fuel-efficient models.
“Toyota clearly remains the market leader (in hybrid electric vehicles), accounting for 44% of hybrid registrations,” she said. “But the competitive makeup is changing. Toyota’s share has declined by more than four percentage points over the past year, while Ford’s has fallen from nearly 10 percent to 6 percent. At the same time, Kia and Hyundai are rapidly gaining ground.”
What can buyers expect from automakers in the future?
Automakers have recently shifted their focus to hybrids, but most manufacturers are not completely abandoning plans to develop more fully electric vehicles in the future.
Mary Barra, CEO of General Motors, said during a recent appearance on Fortune’s “Titans” podcast that her company is still committed to a future of developing primarily electric vehicles, even though that now seems much further away than most initial industry projections.
“I don’t think it’s changed our mission,” Barra said in an interview. “We still think electric vehicles are the end game.”
Similarly, Ford CEO Jim Farley said in a July 2026 interview with USA TODAY that his company’s new $30,000 Fathom electric pickup truck would be its most important car of the future.
“I think you’re going to see a product that really has the potential to change our industry,” Farley said, comparing the new model to Ford’s first mass-produced and highly successful car, the Model T.
“If we reinvented the Model T today, it would be an electric car,” Farley said.
Valdez Streaty, the Cox analyst, said “the building blocks of electrification continue to improve, although consumer adoption varies by powertrain.”
“When it comes to battery technology, the average range of electric vehicles has increased 20% over the past five years, from about 250 miles in 2021 to about 300 miles for 2026 models,” she said. “At the same time, global battery prices have fallen 21% over five years, to $108 per kilowatt hour. Charging infrastructure is also growing.”
Valdez Streaty said it all adds up to a complex picture of the electrification path forward for automakers.
“Demand for new electric vehicles is stabilizing, used electric vehicles are reaching more buyers, and hybrids are providing much of the current growth momentum,” she said. “The market continues to electrify, but the path is proving more gradual and more diverse, with consumers choosing from a wider range of powertrains.”
Keith Laing is an automotive reporter on USA TODAY’s National Trending Desk. Contact Keith at klaing@usatodayco.com.
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