Over the past few years, the federal EV tax credit has played a crucial role in boosting electric vehicle ownership. Buyers of new electric cars have received an average benefit of $6,700, while those opting for used models claimed around $3,400. In total, Americans claimed $3.3 billion in new EV credits and $95.6 million for used EVs in 2023 alone. This direct financial relief helped make EVs more appealing in a country where gasoline-powered vehicles still dominate.
At the same time, the national market for electric vehicles remains relatively modest. According to Supercar Blondie, EVs accounted for just 1.7 percent of all light-duty vehicles on U.S. roads in 2023, even with the tax credit in place. While that figure marked a slight increase from the previous year’s 1.2 percent, the overall momentum remains fragile, with new EV sales actually falling by 6.3 percent in the second quarter of 2025 compared to the same period in 2024.
California Stands to Lose the Most
Among all U.S. states, California faces the steepest drop if the federal EV tax credit ends. The state, which has long led the country in EV adoption, could miss out on approximately $1.1 billion in incentives. Texas follows with nearly $273 million at stake, and Florida comes next, potentially losing around $201 million in benefits.
The scale of California’s reliance on the tax credit is a direct reflection of its aggressive push toward clean energy and transportation alternatives. But as reported by Supercar Blondie, without this financial support, the affordability of EVs could plummet for thousands of consumers, forcing many to delay or abandon electric vehicle purchases altogether.
In contrast, some states may barely register the change. Mississippi, North Dakota, and Louisiana are cited as regions where the EV credit had minimal impact in the first place. With fewer residents investing in electric vehicles, the loss of the credit in these areas is unlikely to disrupt local markets in any significant way.
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Drop in Sales Hints at Waning Momentum
Even before the scheduled end of the credit, EV sales have started to show signs of strain. Nationwide sales of new electric vehicles fell by 6.3 percent in the second quarter of 2025 compared to the same timeframe in the previous year. This downturn suggests a growing hesitation among buyers, potentially tied to the looming expiration of financial incentives.
The trend is especially concerning considering the relatively low base from which EV adoption is growing. At just 1.7 percent of light-duty vehicles, EVs still occupy a small slice of the U.S. automotive market. Without the continued nudge from federal credits, that slice may shrink even further—particularly in areas with limited infrastructure or weak local incentives.
This softening in consumer demand also places pressure on automakers, many of which have expanded their EV lineups in response to environmental goals and evolving regulations. The disappearance of the federal tax credit could force these companies to rethink pricing strategies or cut back production plans to match reduced demand.
Uneven State Infrastructure Could Widen the Gap
The disparity in how different states will be affected by the credit’s end points to deeper structural differences across the country. States like California, Texas, and Florida have made significant investments not only in EV adoption but also in charging infrastructure, public awareness, and state-level incentives. These efforts have created more favorable environments for electric vehicles.
On the other hand, states with limited charging networks or weak policy support may struggle even more to attract EV buyers once the federal incentive is gone. As noted in the same source, this could leave automakers with a “patchwork market,” where progress is clustered in specific regions while others remain stagnant.
The lack of a consistent national strategy means the EV market could fracture along state lines. LendingTree’s analysis, as cited in the article, warns that in the absence of federal support, areas without strong local programs will see demand slow even further, exacerbating the already uneven rollout of electric transportation.
