U.S. New EV Sales Drop 28% YoY in Q1 2026 as Used EV Sales Rise 12%

In the first quarter of 2026, new electric vehicle (EV) sales in the United States totaled 212,600 units, down 28% year-over-year, accounting for 5.8% of total new vehicle sales. Total new vehicle sales during the same period reached 3.67 million units, a 6.5% decline from the prior year. Inventory levels for newly sold EVs rose to a 130-day supply, significantly higher than the 89-day supply for internal combustion engine (ICE) vehicles. The market downturn was largely driven by the expiration of the federal $7,500 EV tax credit on September 30, 2025. Tesla remained the largest EV brand in the U.S., delivering approximately 122,196 vehicles in Q1—a 4.6% year-over-year decrease—representing a 3.3% share of the overall new vehicle market. To address mounting inventory pressures, automakers intensified promotional efforts, pushing the average transaction price of new EVs down to $55,300, narrowing the price gap with ICE vehicles to just $6,500. Meanwhile, the used EV market showed strong momentum, with first-quarter sales reaching 93,500 units—an increase of 12% year-over-year and 17% compared to Q4 2025. The average selling price of used EVs stood at $34,821, only $1,300 higher than that of used ICE vehicles, marking the narrowest historical price difference. Used EV inventory turnover stood at 42 days, approaching the 38-day level for used ICE vehicles. One key driver behind the growth in used EVs is the influx of leased vehicles returning to the market. EVs leased between 2023 and 2025 through the "lease loophole" under the Inflation Reduction Act are now entering the used car market en masse. From 2026 to 2028, approximately 240,000 EVs and plug-in hybrid electric vehicles (PHEVs) are expected to reach lease maturity each month, including nearly 50,000 battery-electric vehicles (BEVs). Despite the slowdown in new EV sales, the broader electrification trend in the U.S. continues to advance. By the end of 2025, the nation’s total EV fleet had reached approximately 5.8 million vehicles, with public charging sessions totaling 141 million throughout the year—a 30% increase from 2024. In Q4 2025, electrified vehicles—including hybrids—accounted for 26% of new vehicle sales. Hybrid vehicle sales alone hit 756,000 units, surging 57% year-over-year. Toyota and Honda captured 43% and 16.3% of the hybrid market, respectively. Rising oil prices driven by Middle East conflicts have heightened consumer interest in electrified vehicles. From February to March 2026, the purchase intent index for “hybrid + plug-in” vehicles exceeded baseline levels, and consideration of EVs peaked at 23.8% in mid-March. However, conversion rates remain a critical challenge. Total U.S. new vehicle sales for 2026 are projected to reach 15.8 million units, down 2.6% year-over-year. Lease penetration is expected to decline to 22%, while used retail vehicle sales are forecast to reach 20.4 million units. The automotive industry absorbed approximately $35 billion in tariff-related costs from 2025, adding roughly $3,800 per vehicle in expenses. These costs have been passed on to consumers through higher manufacturer-suggested retail prices (MSRPs), increased destination fees, and reduced incentives—further amplifying the price advantage of used EVs.