The news: The electric vehicle industry hit a rough patch in Q2, with sales slowing across the board—especially for companies focused solely on EVs.
- Rivian delivered 10,661 vehicles in Q2, down 22.7% YoY and only modestly above its Q1 total of 8,640. Tesla delivered 384,000 vehicles, a 13.5% YoY drop and its second consecutive quarterly decline.
- Even automakers with more diverse portfolios weren’t spared. Ford sold 16,438 EVs in the US in Q2, down 31.4% YoY, while Hyundai’s Ioniq 5 and Ioniq 6 slipped 12.0% and 8.0%, respectively. Kia’s EV6 and EV9 fared worse, with sales down 49.0% and 46.3% in the first half of the year.
Why is this happening? While Tesla CEO Elon Musk’s polarizing political turn has alienated some potential buyers, the challenges run deeper than one brand. The entire US EV market—and the broader auto industry—face mounting headwinds.
- A limited market: Many consumers pulled forward their vehicle purchases in late 2024 and early 2025, anticipating price hikes from looming tariffs. That demand surge has left automakers and dealers with a thinner pool of potential buyers this quarter.
- Affordability pressures: EVs tend to carry a premium over internal combustion vehicles. With interest rates remaining high and inflation still weighing on household budgets, many consumers are opting for more affordable, traditional models—or staying out of the market entirely.
- Infrastructure anxiety: Many potential EV buyers remain hesitant due to ongoing concerns about access to fast, reliable charging, which helps explain why nearly half of consumers say they would not buy an EV, according to Gallup.
- Policy uncertainty: At the same time, policy uncertainty is cooling enthusiasm. The future of key incentives, including the Inflation Reduction Act’s EV tax credits, is unclear.
Our take: If the so-called Big Beautiful Bill passes—as many expect—and eliminates the EV tax credit, the industry could find itself in a downturn it can’t easily steer out of. Without incentives to offset higher upfront costs, EV adoption may slow even further, leaving automakers stuck with inventory and uncertain demand.