DETROIT (WWJ) -- It was a strong summer for car and truck sales, and an amazing summer for electric vehicle sales.
“The biggest driver of September’s strong sales pace is temporarily inflated demand for electric vehicles. The federal EV tax credit expires at the end of the month, which is causing many shoppers to accelerate their purchase,” said Thomas King, president of the data and analytics division at JD Power.
As carmakers release their third quarter sales reports, most are seeing solid gains. GM and Ford both posted increases of around eight percent. The industry average is likely to come in about six percent above the July-August-September period a year ago.
While electric vehicles will likely command a record market share of about 13 percent, it was also a strong quarter for pickup trucks and SUV’s.
“Obviously, there’s still a lot of demand out there for new vehicles, and the average age of a vehicle continues to grow,” says Ford analyst Erich Merkel. “We continue to see brisk demand.”
That demand had been expected to fall this summer, after a strong spring prompted by car buyers trying to beat tariff-related price increases. That was widely expected to pull ahead sales, leading to a summer slump.
“We can put that to rest,” said Merkel. “Because, what we saw in July, August and now again in September, the sales are coming in really strong.”
Ford did set an EV sales record in the third quarter. GM and Hyundai sold twice as many electric vehicles as they did in the third quarter of 2024.
Carmakers are trying to keep EV sales from taking a deep fall, now that federal incentives are gone. GM and Ford are offering good lease deals. Other carmakers, including Hyundai, are trying to keep prices on electric vehicles competitive.
“While the $7,500 EV credit has expired, our electrification strategy has always extended beyond incentives,” says Hyundai North America CEO Randy Parker. “We invested in EV innovation well before the IRA and remain steadfast in our commitment to affordability, quality, and customer care."
Over the long term, this will make it more difficult for carmakers to sell electric vehicles, which are still more expensive to produce. While most analysts expect electric vehicle sales to grow over the long term, it’s going to be slow, and short term we could see some slowdowns.
“I think it’s going to be a vibrant industry, but it’s going to be well smaller than we thought,” said Ford CEO Jim Farley, who said that EV sales will not only be impacted by the end of federal incentives, but by changing environmental regulations as well.
“It’s a game changer.”
Farley sees the electric vehicle demand shifting to less expensive EVs, which will be used more for short commutes. With federal incentives gone, he says October will likely see much lower EV sales.
“We’re gonna find out in a month. I wouldn’t be surprised if EV sales in the US go down to five percent of our industry.”