The October EV Sales Crash

It’s rough these days in electric-vehicle showrooms, as buyers are staying away now that the $7,500 per vehicle tax credit has ended. This is good for taxpayers, and it shows the danger of relying on government subsidies for your business model.

Cox Automotive reports that dealers sold 74,835 new electric vehicles in the U.S. in October, a 30.3% year-over-year decrease. “October marked a sharp reversal for the electric vehicle (EV) market as the expiration of the federal EV tax credit cooled demand after three months of accelerated sales,” said Stephanie Valdez Streaty, director of industry insights for Cox.

The tax credit expired on Sept. 30, which led to a surge of EV buying to get the federal subsidy while it lasted. The sales drop will further pinch the margins for U.S. EV manufacturers, most of whom were losing money on electric cars even when sales were buoyant. GM, Ford and Stellantis are adjusting their EV production to account for the sales plunge. “EV profitability remains a distant dream for nearly every automaker,” Cox said in October.

Many Americans love their electric cars or trucks, and perhaps EVs can hold their own in the post-subsidy marketplace. But that’s where their future should be determined, not in the backrooms of Congress or the White House. One problem with the subsidies, supercharged by the Biden Administration, is that they created a false market for EVs that exceeded genuine consumer demand.