Electric-vehicle leaders Tesla (TSLA), General Motors (GM) and Ford (F) could be staring down their toughest U.S. sales environment yet, with one well-known industry analyst warning of a sharp drop in demand once federal incentives disappear. Under President Trump’s “One Big Beautiful Bill Act” (OBBB), the federal EV tax credit is set to sunset at the end of September, effectively pulling the rug out from under a key driver of adoption for the mass market.
According to iSeeCars.com executive analyst Karl Brauer, the expiration of the tax credit could cut U.S. EV sales in half compared with current levels, erasing years of steady gains. “I think you’re going to see third-quarter EV sales probably go up slightly, or at least remain strong, simply because people who want to buy one are going to jump in before that Sept. 30 deadline,” Brauer told Yahoo Finance. But after that, he cautions, comes a sharp cliff: “We’re going to see a pretty big drop … I could see U.S. [market share] dropping well below 4% immediately after the incentive goes away and maybe settling in the beginning of 2026 around 4%.”
That would mark a dramatic reversal. In August, Cox Automotive reported that U.S. EV market share climbed to 9.1% — the highest ever — with sales surging 20% year over year to more than 130,000 units, as buyers rushed to lock in the tax credit before it expires. For context, the 4% market share Brauer is projecting would essentially cut today’s penetration rate in half.
The IRS has offered some transitional “wiggle room” allowing buyers to take delivery after the Sept. 30 deadline if they’ve already signed contracts, but analysts say those deals will only delay the inevitable. Once the pipeline of pre-deadline orders is filled, EV makers may be left holding excess inventory or slashing prices to keep plants running.
Brauer, who spent nearly two decades as editor-in-chief at Edmunds and also held senior roles at KBB’s Autotrader, said his forecast is significantly more pessimistic than some academic studies. For example, a University of California, Berkeley analysis by Professor Joseph Shapiro estimated that EV sales would fall by about 27% without federal tax credits — far less than the 50% drop Brauer expects.
Automakers are already bracing for the shift. GM on Tuesday reported record August EV sales — more than 21,000 units across its Chevy, Cadillac and GMC brands — as customers raced to take advantage of the tax credit. “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,” Duncan Aldred, GM North America senior vice president, said in a statement. “We will almost certainly see a smaller EV market for a while, and we won’t overproduce. Still, we believe GM can continue to grow EV market share.”
But keeping momentum may require painful trade-offs. Brauer expects GM and other automakers to fight for customers by offering steeper discounts and absorbing thinner margins — a strategy that could hurt profitability just as they’re investing billions in EV platforms, batteries and charging networks.
The stakes extend beyond Tesla, GM and Ford. Lucid (LCID), Hyundai’s Kia affiliate (005380.KS) and other players in the burgeoning EV ecosystem also face the possibility of a post-subsidy hangover. While the industry has weathered setbacks before, the sudden removal of a major incentive at a time of rising interest rates, higher vehicle prices and growing competition from hybrids could make this downturn especially punishing.
For now, all eyes are on the calendar. With just weeks left before the incentive disappears, buyers are rushing to dealers, automakers are accelerating deliveries, and analysts are sharpening their pencils for what could be a pivotal moment in the U.S. EV adoption story.
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