It’s been over a year since electric vehicle buyers in the United States could take advantage of the federal government’s popular $7,500 tax credit for plug-in models, which was phased out at the end of September 2025.
The credit, first adopted in 2008 to help spur EV adoption, was eliminated Sept. 30, 2025, by a law passed by Congress and signed by President Donald Trump.
EV sales have fallen since then, although a spike in gas prices this year has led to renewed interest in plug-in models in 2026. The loss of the credit has also affected the rest of the industry: Carmakers canceled production of several low-selling electric models they could no longer market with the incentive.
As consumers sought more fuel-efficient models amid average gas prices above $4 per gallon, hybrids saw a big increase in interest. Carmakers that were moving away from EVs pitched hybrids to drivers concerned about fuel costs.
Carmakers have sold more than 12 million new cars so far in 2026, similar to their pace in the first nine months of 2025, according to Cox Automotive. About 6% of this year’s new-car sales have been electric, although used EV sales have risen in recent months, the group said.
Jeremy Robb, chief economist at Cox Automotive, said a “tug-of-war” is shaping auto demand. Rising fuel costs are pushing consumers to prioritize essentials and delay big purchases, he said, while growth in savings, money market and stock holdings is bolstering purchasing power, particularly among higher-income buyers.
Why Shoppers Are Turning to Hybrids
Stephanie Valdez Streaty, Cox Automotive’s director of industry insights, said hybrids have been the biggest beneficiary of changes in gas prices and available subsidies for electric models.
“Hybrid vehicles continue to be the clearest growth story in the electrified market,” she said. Hybrid sales volume increased 23% from the second quarter of 2025 to the second quarter of 2026.
That growth pushed hybrids’ share of the U.S. auto market to a record 16.3%, up from 13% a year earlier, Valdez Streaty said.
“For consumers, hybrids offer better fuel efficiency without requiring a major change in how they fuel or use their vehicle,” she said.
Several automakers, including Toyota, Kia and Hyundai, already had multiple hybrid models they could offer drivers who did not want to go fully electric. Toyota remains the hybrid market leader, accounting for 44% of registrations, Valdez Streaty said, though its share declined more than four percentage points over the past year. Ford’s share fell from nearly 10% to 6%, while Kia and Hyundai gained ground.
What Shoppers Can Expect From Carmakers
Carmakers have embraced hybrids recently, but most manufacturers have not abandoned plans to develop more fully electric vehicles.
General Motors CEO Mary Barra said her company remains committed to developing mostly electric vehicles, although that transition appears farther off than many initial industry projections suggested.
Ford CEO Jim Farley said in a July 2026 interview with USA TODAY that the company’s new $30,000 Fathom electric pickup truck would be an important vehicle for its future. Cox Automotive’s Valdez Streaty said the building blocks for electrification continue to improve even as consumer adoption varies across powertrains.
Average EV range has increased 20% over the past five years, from roughly 250 miles in 2021 to about 300 miles for 2026 models, she said. Global battery pack prices have fallen 21% over five years to $108 per kilowatt-hour, and charging infrastructure is expanding.
“New EV demand is stabilizing, used EVs are reaching more buyers, and hybrids are providing much of the current growth momentum,” Valdez Streaty said. “The market continues to electrify, but the path is proving more gradual and more diverse, with consumers choosing among a broader mix of powertrains.”
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