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US EV sales are down, but not out. Here’s why automakers won’t pull the plug

By CNN

(CNN) — A quick glance at US electric vehicle sales might give the impression EVs are a niche product, unable to shake Americans’ love affair with gas-powered trucks and SUVs.

The recent spike in gas prices did little to lift sales, and the elimination of some tax incentives last year cut into demand. Major auto brands have pulled back on American EV plans. US sales of new EVs fell 20% in the second quarter from a year ago, according to Cox Automotive.

But look under the hood, and the picture is nowhere near as grim.

A rush to buy EVs last year inflated sales, distorting the subsequent drop. A booming international market means automakers can’t afford to give up on EVs entirely. And US EV sales are improving from earlier this year.

“While (US) demand has softened following the expiration of federal incentives, automakers cannot simply walk away from electrification,” said Stephanie Valdez Streaty, director of industry insights for Cox Automotive.

Cause for concern?

There is a lot working against American EVs.

The Trump administration halted many financial incentives that supported the industry, including a $7,500 tax credit for EV buyers last October. It also eliminated financial penalties for automakers who violated emission rules, which had pushed automakers toward building more electric vehicles.

Interested buyers rushed in before the tax incentive disappeared last October, causing sales at the end of the year and start of this one to dry up.

Legacy automakers have taken tens of billions of dollars in charges against their earnings over the last year to downgrade EV production plans. Even Tesla, the lone automaker that made a profit selling EVs to Americans, now seems more interested in creating humanoid robots than cars.

But second-quarter sales rose 15% compared to the first quarter. And US sales of used EVs hit a record, according to Cox.

That’s because the previous incentives and regulations created a false level of EV demand, said Ivan Drury, director of insights for car selling site Edmunds. But with most US tax incentives gone, “we do know there is some level of natural EV demand in the market,” he said.

“While it might not be as good for the consumer, since they might not get as good of a deal, for the industry, there’s far more clarity as to how fast to act and what kind of vehicles to build,” he said.

And all the legacy automakers say they do intend to offer new EV models in the future as they see demand growing for reasons like concerns about the environment and high gas prices.

Eric Straka, a physician living in Ann Arbor, Michigan, paid about $32,000 for a Chevrolet Equinox in May.

The city had its own financial incentive program for EV buyers, depending on buyer income levels and whether the vehicle was new or used. Ann Arbor only had a $500,000 budget for rebates, and it ran out of funds in just days.

Straka is still waiting to get his rebate – but the car was worth it even if he doesn’t, he told CNN.

“It’s like smooth and quiet, and by far the best pickup acceleration I’ve ever had in a car” he said.

EV sales surging overseas

Sales continue to rise in the rest of the world, most prominently in China but also in Europe.

Most other countries still have EV incentives, and drivers there pay higher prices for gasoline or diesel.

The International Energy Agency estimates that pure battery electric vehicle sales rose to about 14 million last year from 11 million in 2024 and should rise further in 2026.

Much of the growth comes from China, long the world’s largest market for auto sales. Chinese automaker BYD surpassed Tesla as the world’s largest EV maker last year, and the gap is still widening.

According to the IEA, 55% of Chinese auto sales last year were some form of EV – either fully electric, plug-in hybrids or extended-range EVs with gasoline-powered generators to charge the battery.

Chinese EVs are also big business outside of the country. Exports are soaring globally, in Africa, Asia and South America as well as Europe, according to the IEA.

Competition from Chinese EVs

Chinese EVs have a major advantage over American or European autos – they are much less expensive.

More than 200 Chinese EV models sell for less than $25,000, according to Reuters, with some as cheap as $10,000. Compare that to the latest average price of new US EV at $56,377, according to Edmunds.

The Commerce Department recently ruled that Chinese cars can’t be legally sold in the US, even those built domestically, but experts think that will change someday.

US companies are still combatting growing competition from Chinese rivals in Europe and elsewhere.

In December, Ford announced a partnership with European automaker Renault to develop a small, cheap EV to be sold in Europe but not, as of yet, the United States.

“We know we’re in a fight for our lives in our industry,” Ford CEO Jim Farley told reporters.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

Europe’s economy faces a one-two punch from extreme weather and war

By CNN
London (CNN) — Nuclear power plants idled. Crops harvested at 3 a.m. Iconic tourist attractions shuttered early.Soaring temperatures are forcing drastic measures in Europe, where successive heatwaves are straining an economy already under pressure from US tariffs, Chinese competition and higher energy prices because of the Iran war.Romania’s state-owned nuclear power producer Nuclearelectrica started disconnecting its sole operational reactor from the power grid Thursday because of record-low water levels in the Danube, crucial for cooling its equipment, the company confirmed to CNN. The country has declared a state of energy emergency throughout August and asked businesses and households to voluntarily reduce consumption, Reuters reported.Elsewhere, France and Hungary have had to curtail nuclear power due to low river levels and high temperatures. Drought conditions are also fueling devastating, costly wildfires and reducing crop yields, threatening to push up food prices.Europe’s sweltering summer could cost the economy €180 billion ($208 billion) this year, or 1% of GDP – roughly the entire expected economic growth of the European Union, according to an estimate by Netherlands-based Triodos Bank. “Lower labor productivity is likely to have the largest economic impact, alongside disruptions to agriculture, energy and transport,” the bank said in a report this month.Swaths of Europe are enduring their fifth heatwave of the year this week, with parts of Britain, France, Spain and Italy under extreme heat warnings. The latest scorcher comes after Western Europe recorded its hottest June and July on record, according to Copernicus, the European Union’s climate monitor. In Paris, extreme heat prompted the Eiffel Tower and the Louvre to close early on some days.While some analysts doubt the heat will have a sizeable impact on economic growth this year, pointing to improved business confidence in July and increased GDP in the first half, hot weather is not the only economic threat.Europeans also face the prospect of hikes to their energy bills this winter, as natural gas prices climb. The price of benchmark natural gas futures traded near their highest levels since the start of the Iran war this week, and almost twice as high as the same time last year.The war in the Middle East has made cargoes more scarce and, in turn, more expensive, raising the prospects of another energy crunch. Blistering heat has also raised demand for air conditioning, driving up natural gas consumption at a time when stores need to be refilled ahead of winter.“The EU natural gas market is vulnerable looking ahead to peak winter demand,” Kieran Tompkins, senior climate and commodities economist at Capital Economics wrote in a note earlier this month. “Storage levels are the lowest for this point in the year for over a decade.”Dry rivers, overnight farmingThe Danube is not the only critical European waterway drying out as a result of a prolonged drought.In Germany, Europe’s biggest economy, record-low water levels in the Rhine – an important transport route for industrial goods such as steel and chemicals – could shave 0.3 percentage points off the country’s GDP growth this year, according to economists at pan-European bank ING. That would be a heavy blow for an economy growing at less than 1% a year.BASF, the German chemicals giant, said it may be unable to fulfil orders of some chemical compounds because the Rhine’s low water levels have restricted the supply of certain key raw materials.“We are… shifting volumes to alternative modes of transport such as trucks and rail,” the company told CNN, noting that it was also using a greater number of vessels specifically designed to navigate shallow waters. A number of German states have temporarily suspended Sunday driving bans for trucks in an emergency effort to mitigate supply chain disruption.The European Commission said earlier this year that EU member states should be investing about €70 billion ($81 billion) per year to 2050 in climate adaptation — spending that could boost economies but will also pile pressure on strained government budgets.Some companies have already started adapting in innovative ways. In England, a notoriously rainy part of the world, family-owned Rookery Farm is harvesting its crop at 3 a.m. to ensure it has sufficient moisture content.“Harvest is no longer just about dodging the rain – we’re now adapting to crops that can become too dry, meaning more night-time harvesting to meet the quality standards our customers require,” farmer Eleanor Gilbert said in a video posted to Instagram.High energy prices aheadAs Europe grapples with successive heatwaves, it also faces the prospects of a winter energy crunch. Gas storage levels across the EU were 59% full on Tuesday, according to data from Gas Infrastructure Europe — well below the average for this time of year and on par with levels seen during summer 2021, when Russia had begun restricting exports to the continent.“I’m really concerned,” Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy, said of the EU’s ability to replenish diminished stocks.“There have been very few cargoes… exiting the Strait of Hormuz. All of them are going to Asia,” she told CNN.Summer is primetime in Europe for stocking up on gas before the colder winter months, when prices are often considerably higher. Yet the Strait of Hormuz is still effectively shut, choking off one fifth of the world’s supply of liquefied natural gas — a liquid form of the fuel carried by tankers.Remaining cargoes, such as those from the United States, are also more likely to head for Asia than Europe, say analysts, because demand there is particularly strong and buyers are stumping up more.But this is “not a ’22 crisis,” said Christoph Halser, senior analyst of gas and LNG research at Rystad Energy, referring to that year’s historic price spikes in Europe following Russia’s full-scale invasion of Ukraine.Since then, the continent has greatly reduced its imports of Moscow’s gas — the bulk of which arrived via pipelines — as well as reduced its overall consumption.“Gas demand in Europe today is roughly 20% lower than, let’s say, in 2021,” Halser told CNN.Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie, is also confident that Europe will avoid a dire scenario of energy shortages and blackouts.The risk of shortages are “overstated” he said, adding that the region has the means to “buy itself out” of any such predicament.Still, prices are unnervingly elevated.The price of Europe’s benchmark natural gas contract settled at €61 ($70) per megawatt hour on Wednesday, well above the €32 ($37) logged on the same day in 2025, according to Intercontinental Exchange data.During the winter, “Europe should be really worried about a situation where the Strait of Hormuz doesn’t open because this could certainly result in prices being extremely high,” Di Odoardo said.The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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