US electric vehicle sales are expected to decline materially in the fourth quarter following the expiration of the $7,500 federal EV tax credit, Cantor Fitzgerald said in a new research note published Monday.
“We expect EV Sales to Materially Decline in 4Q,” the analyst Andres Sheppard wrote in the note, citing sharp drops in October and November that reversed a record-breaking third quarter for the industry.
EV sales reached a record high in the third quarter with approximately 410,000 units sold, accounting for more than 10% of total US auto market share for the first time in history, according to data from Cox Automotive cited in the note.
October Sales Plunge
The expiration of the $7,500 federal EV tax credit triggered an immediate sales decline.
“With the expiration of the $7,500 EV Tax credit, EV sales declined materially from ~98,000 in September to ~75,000 in October,” Sheppard wrote. “This accounted for ~6% of all new vehicle sales, a sharp decline from last month.”
Major automakers reported steep year-over-year declines for select EV models in October.
“For example, Ford, Kia, and Hyundai reported October EV sale decreases for select models of 25%, 52%, and 71%, respectively, year-over-year,” according to the note.
The manufacturers — with the exception of Tesla, Lucid, Rivian, and Polestar that only disclose on a quarterly basis — are expected to report November sales figures later this week.
Cox Automotive characterized the October results as a “sharp reversal for the electric vehicle market as the expiration of the federal EV tax credit cooled demand after three months of accelerated sales.”
November Weakness Continues
The weakness extended into November, with new-vehicle sales estimated below year-ago levels across most segments.
“Almost every vehicle type (mid-size car, compact car, compact SUV/crossover, full-size pickup, mid-size SUV/crossover, etc.) is expected to decline in sales vs. November 2024,” Sheppard wrote, citing Cox projections.
Cox Automotive forecast the November seasonally adjusted annual rate at 15.7 million vehicles, up slightly from October’s 15.3 million pace but down from 16.5 million a year earlier.
Sales volume is expected to fall to 1.27 million units, down 1% from October and 7.8% from the prior year.
November had 25 selling days, two fewer than October and one less than November 2024, partially accounting for the volume decline.
“Overall, we expect EV sales to continue dropping in December, as they remain affected by the Tax Credit Removal and tariffs,” the Cantor analysts concluded in their note.
Last week, J.D. Power released a new report forecasting that US electric vehicle sales will drop 37.6% year over year in November.
While the figures are consistent with October’s estimates, they are well below the 12.9% recorded in September, the firm noted.
