Growth: In June 2025, U.S. EV deliveries were down about 6% y/y (Cox Automotive), marking the first quarterly decline in modern EV volumes. In the previous quarter (March 2025), deliveries were up 9% y/y. That 6% decline in June for the industry was better than Tesla’s overall deliveries, which were down 14% y/y in the quarter. While the company does not break out deliveries by region, I estimate that Tesla in the U.S. was down closer to 18% in June. This decline underscores the cooling EV environment, driven by a combination of factors including softening consumer excitement and a downturn in Tesla’s U.S. sales caused by Elon’s politicking. It’s worth noting that despite the softening, June still ranks among the highest quarters on record for EV sales.

EV Market Share: Importantly, EVs continued to hold steady market share. Cox Automotive shows EVs accounted for about 8% of new light vehicle sales in June, flat from June 2024. J.D. Power notes a 1.9 percentage point y/y drop in EV market share to 8.4% in June, while hybrids surged to a record 14.1%, reflecting consumer interest in more transitional electrified options. The bottom line is that EV share has remained stable over the past year. One reason why EV market share has been holding in there is non-Tesla makers have increased their incentives. The net effect is the average price for a new EV was still around $57.7k, effectively unchanged over the previous year, and still well above the average price of all new cars at $46.2k. Looking ahead, Cox Automotive issued a mixed-bag outlook, lowering its 2025 full-year forecast for EVs to a 9% share, down from its 10% projection made in January, while at the same time expecting units to be up 10–12% y/y.

Tax Credits: The sunsetting of tax credits in the U.S. will dampen sales, but not as much as many think. For starters, the tax credit is used by about 60% of EV buyers today. That means about 40% of buyers have never qualified for the benefit. Second, for those that can access the credit, they will effectively see the cost of the vehicle increase by about 13% ($7.5k off an average $57.7k new car price). That 13% increase will dampen sales by likely 15%. That said, there have been recent periods — 2020 to mid-2022 — when Tesla buyers, for example, did not have access to the credits and sales were still robust. During that period, Tesla on average posted a 75% increase in deliveries y/y, as the Model Y began to ramp. My point is there’s evidence that new, exciting EV models can experience rapid growth even without tax credits.

The bottom line is while EV penetration is growing, the pace has clearly decelerated, prompting questions about the path to mass-market adoption.

In the fall of 2024, GM, Ford, and Toyota began to measurably cut their investment and outlook for EVs. Notably, Ford said they will reduce their capital allocation for EVs from 40% to 30%, and Toyota reduced their 2026 EV target from 1.5m to 1.0m.

Despite that high-level pullback, traditional automakers have, over the past year, brought new EVs to market. Between mid-2024 and mid-2025, Detroit and Seoul launched a wave of mainstream EVs, including the Chevrolet Equinox EV, Kia EV9, Honda Prologue, Acura ZDX, and BMW i5, among many others. Roughly 30 new battery-electric models entered the U.S. market over this 12-month span, spanning nearly every segment: compact crossovers, three-row SUVs, luxury sedans, and full-size trucks. This influx expanded the EV selection from fewer than 50 two years ago to over 75 EV models available today, according to Cox Automotive.

I believe these model rollouts show an ongoing commitment to electrification. The breadth of new entrants demonstrates that while short-term demand may have softened, product development cycles remain on course.

Consumer EV hesitancy is now most visible in the surge of hybrids. J.D. Power data show hybrids accounted for a record 14% of June 2025 retail sales, compared to the 8% EV share. The message is consumers want electric options, but aren’t willing to make the full jump given the unknowns around range, public charging, and resale values. I believe the growth in hybrids is a precursor to future growth in EVs as confidence in electrification grows with the use of hybrids.

On balance, the past twelve months look less like an EV bust and more like an adolescence: incentives, inventory, and a mainstream buyer base are all converging to define the next growth cycle.

Some notable models released in the past 12 months:

• Tesla: Cybertruck (pickup) – First public delivery event was in November 2023, with wider availability and resumed ordering in August 2024

• Chevrolet (GM): Equinox EV (compact SUV), Blazer EV (midsize SUV)

• Cadillac (GM): Escalade IQ (full-size luxury SUV), Optiq (compact luxury SUV)

• GMC (GM): Sierra EV (full-size pickup)

• Honda: Prologue (midsize SUV)

• Acura: ZDX (luxury midsize SUV)

• Kia: EV9 (three-row SUV)

• BMW: i5 (executive sedan)

• Polestar (Volvo/Geely): Polestar 3 (luxury midsize SUV)

• Volkswagen: ID. Buzz (three-row electric minivan)

• Porsche (VW Group): Macan Electric (performance luxury SUV)

• Fiat (Stellantis): 500e (subcompact city EV)

• Rolls-Royce (BMW Group): Spectre (ultra-luxury coupe)

Deepwater’s updated forecast now targets about 25% U.S. EV share by 2030 and 50% by the mid-2030s, roughly five years later than we projected in 2021. Average selling price, range anxiety, and the price of gas will impact the adoption curve. That said, EVs are superior tech for moving people around compared to gas. The electric drivetrains remain inherently simpler, require less energy than gas, require less maintenance, and are increasingly cost-competitive to build. At the end of the day, I believe consumers will vote with their pocketbooks, and the lower cost of ownership for an EV is compelling.

Cost per mile

• Fuel: We estimate based on today’s average price per gallon ($3.16), the average fuel cost per mile of a light vehicle is $0.14. That compares to the average electricity cost per mile for an EV at $0.05.

• Maintenance: An AAA study last year found EV servicing at $0.08/mi compared to $0.10/mi for gas cars, given fewer moving parts and no oil changes. Consumer Reports echoes the theme, finding lifetime maintenance costs of $0.03/mi for EVs versus $0.06/mi for gas vehicles.

Over 100,000 miles of driving, those savings equate to $11k ($9k for fuel, $2k for maintenance) in total ownership cost advantage for a typical EV. While today EVs cost about $10k more than an average gas car, over time there will be parity as EV makers push for more affordable options (Tesla’s new affordable model, Chevy’s next-gen Bolt, Hyundai’s forthcoming Ioniq “3-series,” etc.). That means an average person can save about $1,400 a year by driving an EV (assuming an 8-year life and 14k miles driven per year).

Bottom line: The timeline to mass electrification has stretched, but the economic incentives are still in place for EVs to eventually account for all vehicle sales. Once mainstream buyers internalize that an EV can cost half as much to “fuel” and meaningfully less to maintain, uptake should accelerate, especially as charging infrastructure scales and compelling sub-$40k options proliferate.

Disclaimer