California’s new energy vehicle registrations plummeted in the fourth quarter of 2025 after the expiration of federal tax credits on September 30.
Nationwide, the EV share of new-vehicle sales nearly halved to 5.8% in the fourth quarter, returning to early 2022 levels — after peaking at 10.5% in the third quarter of last year.
Registrations for electric vehicles, plug-in hybrids, and hydrogen fuel-cell vehicles in California fell to 79,066 in the final three months of 2025 — down 36.6% from the 124,755 recorded in the third quarter.
The figure marked a 27% decline from the same period a year earlier and the lowest quarterly total since at least early 2023 — according to data released Tuesday by the California Energy Commission.
The sharp drop in the nation’s largest EV market followed a surge in the third quarter as buyers rushed to purchase vehicles before the $7,500 federal tax credit for new EVs and $4,000 credit for used models expired by the end of September.
Incentive Impact
The quarterly data reveals California’s EV market had already been losing momentum before the tax credit ended.
Year-over-year growth rates, which exceeded 45% throughout 2023, turned negative in the second quarter of 2024 and remained weak through the first half of 2025.
Registrations fell 14% year-over-year in the second quarter of 2025, the steepest decline before the credit expiration. The third-quarter spike to 124,755 — up 8% from a year earlier — proved to be a short-lived rebound driven by the looming deadline.
State officials sought to emphasize the broader trajectory despite the quarterly decline. Governor Gavin Newsom, noted that cumulative zero-emission vehicle sales in California have surpassed 2.55 million, up 300% since the end of 2019.
“California didn’t reach 2.5 million zero-emission vehicles by accident — we invested in this future when others said it was impossible,” Newsom said at the World Economic Forum in Davos, Switzerland.
US Total
Nationwide electric vehicle sales plunged to their lowest level in three years during the fourth quarter after federal tax credits expired, erasing much of the gains from a record-setting third quarter.
Total EV sales fell to 234,000 units in the final three months of 2025, down 46% from the third quarter and 36% lower than the same period a year earlier, according to Cox Automotive data.
The figure marked the weakest quarterly result since the fourth quarter of 2022.
Both Ford and General Motors have recently recorded billions of dollars in write-downs on EV assets.
Policy Battle
The tax credit was eliminated under the One Big Beautiful Bill Act signed by President Donald Trump in July.
Last June, Trump also signed Congressional Review Act resolutions rescinding California’s electric vehicle rules and diesel engine mandates.
California and 10 other states have filed a lawsuit challenging the actions as unconstitutional.
Newsom recently announced plans to allocate $200 million for a state rebate program for zero-emission vehicle buyers.
However, the program’s details — including rebate amounts and eligibility requirements — still require approval from the state legislature.
