The landscape of the electric vehicle (EV) market is undergoing significant transformation following the expiration of federal tax credits on September 30, 2025. Jeff Aiosa, President and Owner of Mercedes-Benz New London and a board member of the National Automobile Dealers Association (NADA), provides insights into the potential impact on the industry during a discussion on Inside Automotive.
The shift to an electric future in the automotive sector is fraught with challenges, now compounded by the loss of these federal incentives. However, Aiosa maintains a positive outlook, anticipating that the adoption of EVs will continue to rise over time.
“I often say we’re on an irreversible path to electrification. I feel that the timeline is much longer than what was initially anticipated.”
Aiosa suggests that once EVs achieve cost and range parity with internal combustion engine (ICE) vehicles and once charging infrastructure is more robust, consumer interest will likely increase. Presently, there are an estimated 135,000 to 140,000 unsold electric vehicles in dealerships across the country, indicating significant opportunities and challenges for both new and used markets.
EV Prices and Sales Post-Credit Expiration
The rush to purchase EVs before the tax credits expired has led to an uptick in used EV prices, bringing them closer to their ICE counterparts. Despite this increase, EVs remain the more economical choice, as they typically depreciate by about 30% in their first year, a steeper decline than gas-powered vehicles.
New vehicle sales are steady, with a seasonally adjusted annual rate (SAAR) of 16 million, and battery-electric vehicles (BEVs) currently account for approximately 8% of total sales year-to-date. Tesla represents about half of these sales. With the absence of federal incentives, EV sales might see a reduction by as much as 50%.
Hybrids as a Bridge to Full Electrification
Plug-in hybrid vehicles (PHEVs) have served as an effective transition for consumers toward fully electric vehicles. The previous $7,500 incentive encouraged many to lease PHEVs, with half of those customers opting for EVs upon their next lease or purchase.
The federal tax credits simplified the EV sales process. In their absence, dealership staff must gain more practical experience with EVs. Salespeople who personally drive EVs often find selling them easier, as familiarity with the vehicles’ advantages enhances their ability to communicate those benefits to potential buyers.
Tariffs’ Influence on Vehicle Costs and Ownership Patterns
The initial demand spike due to President Donald Trump’s auto tariffs provided a temporary boost to sales. Nonetheless, the impact on 2025 model prices was minimal. For the 2026 model year, prices have increased by an average of 3%, with the potential to rise as much as 15%, affecting manufacturers, dealers, and consumers alike.
Affordability remains a critical issue, with new vehicle prices averaging around $50,000, leading to an average vehicle ownership period of 13 years. This trend affects both new and used vehicle inventories and fleet renewal rates.
Looking Ahead in the EV Market
As advancements in EV technology continue to extend driving ranges and as public charging networks grow, Aiosa is confident that consumer adoption of EVs will increase. Although the transition may take longer than originally anticipated, the prospects for EVs remain bright.
Original Story at www.cbtnews.com