What EVs Say About the Sustainable Transition
Electric vehicles have become the everyday yardstick for measuring our progress toward sustainability. Unlike solar panels on rooftops or compost bins in backyards, EVs and their characteristic light bar are highly visible. You notice when your neighbor swaps a gas-guzzler for a Tesla, Rivian and increasingly mainstream options like the Chevy Equinox. When an EV appears in a driveway it’s a visual representation and tangible sign that a sustainable choice is becoming mainstream. The more we see sleek, silent EVs on our streets, the more real the energy transition feels in our daily lives. Indeed, the cars passing by all around us often tell the story of how far the greening of the automative space has come.
Record EV Surge and an Incentive Cliff in Q3 2025
In the United States, that story is hitting a dramatic moment in Q3 2025. With EV sales surging to an all-time high — about 438,000 electric cars sold from July through September, representing 10.5% of all new vehicles for the quarter. This rush was largely driven by policy timing: buyers raced to beat the expiration of the $7,500 federal EV tax credit at the end of September. The credit, originally intended to last until 2033, was cut short by the new administration’s “One Big Beautiful Bill Act,” causing a “use it or lose it” stampede of EV purchases. As a result, Q3 shattered previous records (eclipsing even the EV sales spike of late 2024).
However, this boom comes with the concern of a looming bust. Automakers and analysts warned that with the incentive gone, demand could falter. Ford’s CEO, Jim Farley, cautioned he “would not be surprised” if EVs plunge to only ~5% of U.S. auto sales in the month after the credit ended — roughly half the EV market share seen at this summer’s peak. Nissan’s U.S. chairman went so far as to predict “the EV market is going to collapse in October” without the subsidy. This Q3 sales party was followed by fears of an EV sales cliff in Q4. Early industry forecasts back this up: Cox Automotive expects EV sales to drop notably in Q4 now that the federal incentive training wheels have come off.
Macro Headwinds or EV Trouble?
Does a post-incentive dip mean EV demand has fundamentally dried up? Well, not necessarily. We think that context is key. Any softening of EV sales comes amid broader economic headwinds that are likely affecting auto sales overall. U.S. consumers face record-high vehicle prices and interest rates, along with news that auto loan defaults and repos are reaching new highs — an environment that is making new cars of any kind less affordable. Indeed, industry analysts note new vehicle demand is expected to moderate toward the end of 2025 due to affordability issues and an economic slowdown, after a strong first three quarters. A pullback in EV car buying will likely be part of larger challenges in the automotive world and markets in general.
It’s also important to remember that Q3’s EV frenzy was a one-time policy-driven spike. Some payback in Q4 is inevitable as many buyers simply moved up their purchases to snag the credit. Barclays analysts predicted exactly this pattern, with a “pre-buy” surge followed by “sharp declines in the months to follow,” given the sudden removal of both the EV purchase incentives (the “carrot”) and eased emissions rules (the “stick”) in the U.S.. Even before the incentive deadline rush, U.S. EV sales had been slowing their growth rate, rising only about 1.5% in the first half of 2025 year-on-year despite many new models launching. This suggests the early adopter wave was hitting a plateau due to factors like higher costs, limited charging infrastructure in some areas and competition from hybrids.
Crucially, the EV slump appears to be cyclical, not structural. Automakers are already reacting by improving the consumer value proposition rather than abandoning EVs. For example, Hyundai is cutting $10,000 off the price of its Ioniq 5 electric crossover for the 2026 model year, and GM and Nissan both unveiled sub-$30,000 versions of their respective Bolt’s and Leaf’s — moves aimed at keeping EVs attractive without the federal credit. Further, some state and local governments are boosting their own EV rebates (e.g. Colorado and even city programs in Burlington, Vermont) to sustain momentum. Meanwhile, public charging networks continue to expand steadily. All this underscores that the long-term EV push is intact and that what we’re seeing are likely temporary adjustments to changing market conditions and not a wholesale rejection of electrification by consumers.
EV Adoption Around the World: Still Charging Ahead
It’s helpful to zoom out and look globally. Because the EV transition is a global trend, we can see major auto markets where more consistent policies and/or stronger consumer incentives are applied, EV sales continue to climb relentlessly.
Here’s a snapshot of broader EV momentum:
China: The world’s largest auto market and EV leader continues to trail blaze. In 2024, over 40% of new cars sold in China have been electric (battery EV or plug-in hybrid). By the end of 2025, China’s EV share is on track to exceed 50% of all new light vehicle sales — an astonishing transformation driven by competitive domestic EV brands, aggressive pricing, and supportive policies. China has turned EVs into a mass-market phenomenon, and its automakers are now exporting that success globally.
Europe: Across the continent, roughly one in five new cars is now fully electric on average. The continent’s EV share hovered near 20% in 2025, up from virtually nothing a decade ago, thanks to a mix of CO₂ emissions standards, incentives, and expanding model choice. Importantly, this is an average with some European countries ploughing way ahead. Norway is the poster child, almost 90% of new cars in 2024 were fully electric (and over 95% were plug-in including hybrids). In fact, Norway’s EV sales now approach 100% in 2025, effectively erasing petrol cars from showrooms. Other countries like Sweden, Denmark, and the Netherlands are following, each with 50–80% of new car sales electric when including plug-in hybrids. Europe’s automakers know that ever-tightening emissions rules (the EU plans to ban new combustion car sales by 2035) mean there’s no turning back. EVs are expected to capture 25% of Europe’s new car sales in 2025 and continue surging to nearly 63% by 2030, according to EV Volumes July 2025 forecasts.
North America: Canada and some U.S. states like California are maintaining strong EV policies (California aims to phase out new gas car sales by 2035 as well). While the U.S. as a whole is hitting a speed bump in 2025, projections still show North America’s EV share rebounding after 2025 — reaching about 27% by 2030. Consumer interest remains high, especially as more electric pickup trucks and SUVs (popular body styles in the US) and crucially, affordable models hit the market in coming years.
Global Outlook: Taken together, EV sales worldwide keep setting records. Over 17.1 million EVs were sold globally in 2024, up ~25% from the year prior, and ~22 million are projected for 2025 — up a further 25% from the year prior. Analysts expect that to exceed 40% of new cars by 2030 on our current trajectory. In many emerging markets EV adoption is also accelerating, driven by affordable models (often from Chinese manufacturers) and a desire to reduce fuel imports. Each year, a greater slice of the world’s new car buyers choose electric. Any temporary and country-specific slowdowns will likely be outweighed by growth elsewhere.
As Cox Automotive noted, electrified vehicles are the future of transportation—it’s just that some countries are already living that electric future today. This momentum abroad will inevitably circle back to the U.S., through market forces and the sheer availability of new EV models that global manufacturers will develop and as the cost of batteries (the primary driver of EV expense) continue to drop while production capacity increases.
No Turning Back to Gasoline
From the perspective of the auto industry, the big question is: Do carmakers retreat to selling more gas cars if EVs slow down? The resounding consensus so far is “no”. Going back to the internal combustion is not a viable growth strategy. Automakers have poured tens of billions into electrification and they recognize that’s where the long-term market is headed (not to mention where regulations are pointing). Any short-term boost in gasoline car sales would be fleeting; the overall trajectory for gas-only cars is downward. Globally, countries and states are setting expiration dates for new combustion car sales (2035 in the EU, 2030 in the UK, 2035 in California, etc.), and competitors in China are fully committed to EVs. Automakers that reversed course on EVs would risk irreversibly ceding technological leadership and market share to rivals.
In fact, rather than abandon EV plans, some companies are doubling down on their electric strategy despite the policy turbulence. Volvo’s CEO Håkan Samuelsson recently emphasized they will not shift their strategy based on government policies, reaffirming “our ambition is to be an electric company… not based on any tax credits or incentives. It’s based on an electric car is better for consumers.” The sentiment that EVs are simply a superior product in the long run is echoed across many boardrooms. Manufacturers and consumers see advantages in EVs such as lower maintenance, superior performance, and the ability to update cars via software. Those are selling points that can win customers even without heavy subsidies, especially as innovation in batteries advance.
To be sure, automakers are adjusting tactics in the face of current challenges by stretching timelines for some new EV model launches, recalibrating production to avoid oversupply, and focusing on cost reductions. But none are suggesting a wholesale return to an internal combustion lineup. The investments in battery factories, dedicated EV platforms and supply chains for critical minerals are massive and still ongoing. The industry knows that if they slow down, someone else will eat their lunch. A vivid illustration: while U.S. legacy automakers cope with an EV sales dip, Chinese EV brands are expanding aggressively, and Tesla is still targeting growth through price cuts. The competition isn’t waiting. As the Electrification Coalition warned when the U.S. cut its EV credits: “the future of transportation is electric; this bill forfeits America’s role in that future to China”.
A Proxy for Progress, and Progress Continues
Looking around your neighborhood today compared to a few years ago, the change is visible. Maybe a couple of families on your block now drive EVs, and public charging spots have popped up at the grocery store or office park. These everyday sightings of electric cars are the proxy for the broader sustainability transition. Every new EV is a rolling billboard announcing that change is here, that clean energy choices are not only becoming the norm, they are better choices for the consumer.
The road can get bumpy. Economic downturns, political shifts, or supply hiccups like battery shortages may tap the brakes occasionally. The recent U.S. EV sales fluctuations reflect those realities. But they are not reflecting a failure of the EV platform, but a reminder that the transition won’t always be smooth or exponential. Yet, the bigger picture remains one of forward momentum. Even in the U.S., total EV sales for 2025 will likely still exceed last year’s, and automakers are preparing for an electric rebound once consumers adjust to the new pricing landscape. Meanwhile, internationally, the EV march continues apace, pulling the industry along with it.
Ultimately, it goes beyond cars. It’s about what those cars represent about the future and the path built through sustainable innovation. By that measure, we should take notice: despite some headwinds, the trend line is pointing up and every year that passes brings better technology and choices along with broader acceptance.
Benefiting From the Sustainable Transition
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