More market and political potholes on the road ahead for electric vehicle sales, but the sector continues to make progress.
That’s as it should be for any new technology with long-term marketplace practicality and viability ambitions. EVs cannot rely on government incentives forever. And neither will they need to as battery and recharging infrastructure and technology improve and EV model and price options multiply.
In the meantime, EVs and the rest of the consumer car market need to navigate around what Cox Automotive Chief Economist Jonathan Smoke said is “the elephant in the room” in 2025: tariffs.
During the U.S.-based automotive services company’s mid-year market review, Smoke pointed out that North America’s auto industry is among the hardest hit by the Donald Trump administration’s April 2 Liberation Day tariff launch party.
And within that sector, the categories most affected have been the bottom [most affordable] and top [luxury] of the North American auto market.
Cox numbers show tariffs adding anywhere from US$1,000 to US$7,200 to base automobile prices. The U.S. tariffs on imported steel and aluminum alone add US$1,000 to the cost of an average-priced new vehicle sold in the United States.
That average price is hovering around US$48,799 compared with the recent US$50,000 peak in December 2022.
Cox sees the new-car market slowing in 2025’s second half following a Q1 sales surge before the Liberation Day tariff offensive.
That sales slowdown is also hitting the North American EV market.
But it faces more than tariff speed bumps.
Stephanie Valdez Streaty said one of the EV market’s most pressing headwinds “is policy uncertainty.”
The director of industry insights for Cox noted that the U.S. “Inflation Reduction Act has played a pivotal role in accelerating EV adoption, particularly through tax credits and leasing incentives. However, these benefits are set [to be phased out] or become more restrictive. This looming expiration could dampen consumer enthusiasm and slow the pace of adoption, especially among price-sensitive buyers.”
She added that another potential EV sales disruptor is the federal government’s challenge to California’s ability to set stricter vehicle emissions standards “which have historically driven innovation adoption across the industry. Automakers that have aligned their strategies with California's aggressive targets may need to recalibrate, and the ripple effects could be felt nationwide.”
Dan McTeague, president of Canadians for Affordable Energy, recently called for Prime Minister Mark Carney to follow the lead of his U.S. government counterpart and repeal Canada’s EV mandate requiring all new light-duty vehicles sold in the country to be battery-powered or hybrid by 2035.
The BC NDP is also considering loosening its legislated target of zero-emission models accounting for 90% of vehicle sales by 2030.
EV model choice and price range continue to increase.
Globally, according to International Energy Agency (IEA) data, the number of electric car models rose 15% to nearly 785 in 2024 compared with 2023.
The IEA predicts that number could reach 1,000 by 2026.
Five years ago, North American consumers had 17 EV models to choose from. Today, they have 75.
Limited EV choice, especially in the smaller, more affordable category, has been a major sales roadblock in North America compared with Asia.
In China, for example, 11 million EVs were sold in 2024. That was a 50% share of new car sales.
Why?
Maybe because 60% of car options were EVs and 45 of those options were in the small car category, where 90% of sales were electric.
Also: China has 1.6 million public charging stations. The U.S. has 200,000; Canada has around 13,000.
So, when you add in tariff and incentive complications, it’s not surprising that North America’s EV sales are far less robust than they are in Asia.
Valdez Streaty said preliminary Q2 2025 estimates point to a 6% year-over-year drop in EV sales in the U.S.
Cox has also downgraded its new-vehicle market share for EVs: 9% compared with its previous 10% forecast by year’s end.
But Valdez Streaty added that while uncertainty around government policy and market dynamics remains, “the EV transition continues to move forward, driven by innovation, strategic investment and growing industry collaboration.”
There is also EV adoption optimism in the wider world.
As noted in a previous Substack Shipping News story, the IEA’s Global EV Outlook 2025 shows that more than 17 million EVs were sold in 2024, a 20% market share.
Q1 2025 sales were up 35% compared with Q1 2024.
So, transportation electrification is nearing its tipping point.
Government incentives kick-started that road trip. It’s up to the technological and environmental upsides of EVs and their overall consumer appeal to complete the journey.
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