US electric-vehicle sales have tumbled 31% year-on-year in the first nine months of 2026, with EV penetration dropping to just 6% of new-car sales, according to data from Motor Intelligence cited by Chinese outlet D1EV. The slump follows the expiration of the $7,500 federal tax credit a year ago, which had briefly pushed penetration to 8.5% as buyers rushed to beat the deadline.
Across the Atlantic, Europe's EV share has climbed to 23.2% from 17.7% a year earlier, per the European Automobile Manufacturers' Association (ACEA). Higher fuel prices from Middle East tensions have nudged more Europeans toward electric models, but policy differences are the main driver of the split.
Policy divergence reshapes both markets
In Europe, automakers must meet strict tailpipe emissions rules, forcing them to launch more EVs. Chinese brands have also flooded the market with imports, giving buyers far more choice. Brussels-based campaign group Transport & Environment counts more than 150 EV models on sale in Europe in the first half of 2026, up from about 100 in 2024. Many cost under 25,000 euros (about $28,000), and with national tax breaks, the entry barrier is low.
The US, by contrast, has cut EV subsidies and loosened fuel-economy rules under the Trump administration. High tariffs and a ban on Chinese automotive software have effectively kept Chinese brands out. Automakers have responded by halting EV production, shelving new models, or scrapping low-monthly-lease deals that had propped up sales.
US buyers haven't abandoned electrification—they've pivoted to hybrids. Hybrid sales rose 23% in the first three quarters, reaching 15.6% of the market. Thad Szott, a Detroit-area dealer handling Ford, Stellantis, and Toyota, said: "There is still demand for EVs, but consumers are clearly moving toward hybrids." Nissan has pulled forward the hybrid version of its Rogue SUV by several months. "It's a safer choice for customers worried about range," said Tiago Castro, Nissan's senior vice president for US sales and marketing. "With government subsidies, it was a completely different story."
The used-EV market is also heating up. CarGurus data shows used EV sales rose 19% in the first nine months, as budget-conscious buyers turn to cheaper second-hand models to cope with high gas prices—a sign that EV demand is shifting from policy-driven to price-driven.
Winners and losers in the US
Not all US EV makers are suffering equally. Tesla's US sales fell just 14%, while Rivian grew 29% on the launch of its new R2 SUV. Legacy automakers fared worse: Ford's EV sales dropped 68% and General Motors' fell 43%. Honda will stop selling EVs entirely after this year, expanding its hybrid lineup instead. "Once the $7,500 credit was cut, EV share dropping was obvious," said Lance Woelfer, Honda's US sales VP.
Hyundai is bucking the trend. CEO Randy Parker said EV sales have started recovering as fuel prices rose in late winter, with dealers calling to order more stock. "We have no intention of giving up on EVs," he said.
The US-Europe contrast underscores how policy shapes short-term EV adoption. Europe's emissions rules, tax incentives, and Chinese competition have pushed penetration past 23%, while the US retreat has sent buyers back to hybrids and used cars. For Chinese automakers, the lesson is that a one-size-fits-all export strategy won't work: Europe remains open despite tariffs, requiring strong products and local production, while the US market is largely closed for now, warranting a wait-and-see approach, according to D1EV.
