Once upon a time, Americans could get big federal tax incentives for buying electric vehicles, heat pumps, rooftop solar, and home batteries. But the Trump administration scrapped those tax breaks last year — and no category of household cleantech has suffered more as a result than EVs.
Consumer spending on EVs has fallen off a cliff since the phaseout of the $7,500 federal tax credit at the end of last September.
In a rush to snap up that incentive before it disappeared, Americans spent a record $31 billion on EVs in Q3 2025 — only for that figure to plummet to around $18 billion for each of the last two quarters, per new data from the Clean Investment Monitor, a joint project of Rhodium Group and the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research.
It’s the equivalent of turning back the clock to early 2023 in terms of spending on EVs, which made up nearly 10% of new car sales in the U.S. in 2025.
The effects have been less dire for other consumer cleantech, like distributed electricity and storage — primarily rooftop solar and home batteries — as well as heat pumps.
Under the 2023 Inflation Reduction Act, consumers could access tax credits that covered 30% of the cost of rooftop solar and home storage systems with no cap, as well as incentives that covered 30% of heat pumps up to a limit of $2,000 per tax year. The One Big Beautiful Bill Act eliminated those incentives last December.
Subsidies are a great way to ruin an economy. Let markets mandate! If EVs can’t compete with gas guzzlers they have no reason to exist. BTW, I heard that EV sales are rebounding now that the subsidies are gone.
GoogleAI:
You heard correctly—global EV sales are rebounding robustly, with the International Energy Agency (IEA) projecting sales to reach nearly 23 million units this year. While the withdrawal of government incentives caused a temporary demand slump in major markets like the U.S. and China, the industry has bounced back due to drastically lower battery costs and more affordable models. [1, 2, 3, 4, 5, 6]
The recovery features significant regional trends:
Europe: Serving as the global growth engine, European EV registrations recently surged by an impressive 40% in the EU. Countries like Spain, France, and Portugal recorded all-time highs for Battery Electric Vehicle (BEV) sales. [1, 2, 3]
Emerging Markets: Beyond the traditional top three markets, sales soared by nearly 50% in the other 148 countries combined. South Korea saw EV adoption jump by 26%, while Southeast Asia experienced a 40% increase. [1, 2]
Used Market Boom: While new car sales have faced headwinds, the used EV market is experiencing a major surge, with prices climbing sharply as buyers look to avoid premium sticker prices on new models. [1, 2]
The modern airline industry would not exist if it had not been for subsidies after WW2. Heck, one of your favorite investments, Tesla, would not likely exist if not for subsidies - it received a half billion dollar loan from the fed gov in 2010 and Musk is on record stating that the loan was critical to the survival of Tesla. How much of your own personal wealth may not exist today if not for that subsidy?