U.S. Electric Vehicle Market Struggles as Global Sales Surge

As the global electric vehicle (EV) market gains momentum, the U.S. is facing significant challenges, highlighted by a recent warning from Tesla CEO Elon Musk. He cautioned that the cessation of U.S. government support for EVs could lead to “a few rough quarters” for the automaker, following its steepest revenue and delivery decline in over a decade. The immediate growth prospects for Tesla in the U.S. appear bleak, even as global sales continue to rise.

Global Sales Surge While U.S. Market Declines

According to data from Rho Motion, approximately 9.1 million EVs were sold worldwide in the first half of 2025, marking a 28% increase year-on-year. China led the charge with 5.5 million units sold, followed by Europe with 2 million. In stark contrast, North America reported a modest gain of just 900,000 units, representing a mere 3% increase from last year, as noted by Electrek.

In the U.S., the situation is less encouraging. Data from Cox Automotive indicates that EV sales in the country fell by 6.3% in the second quarter compared to the same period in 2024, totaling 310,839 units. This decline marks only the third quarterly year-on-year drop since electric vehicles gained mainstream traction. Despite substantial incentives averaging $8,500 per vehicle in June, which accounted for nearly 15% of the sticker price, these efforts have failed to stimulate additional demand.

Competitive Landscape Shifting Rapidly

Tesla’s global deliveries dropped to 384,122 vehicles in Q2, a decline of 13.5% year-on-year, according to Reuters. Meanwhile, BYD reported a 16% increase in global deliveries and a remarkable 46% jump in battery-electric sales, surpassing Tesla in global battery electric vehicle (BEV) market share for the quarter. General Motors also saw significant growth, delivering 46,280 EVs in Q2, more than doubling its volume from a year earlier and positioning itself as the second-largest EV seller in the U.S.

Ford has also increased its sales but has recently slowed its EV investment due to mounting cost pressures and revised capital priorities. The landscape is changing rapidly, particularly as U.S. policy shifts. The recently signed “Big, Beautiful Bill” by former President Donald Trump eliminates the $7,500 federal EV tax credit effective October 1, ending credits for used EVs and home charger installations.

Analysts predict a temporary boost in Q3 as consumers rush to make purchases before the credit deadline, but a deeper decline is expected in Q4, according to Reuters. Furthermore, infrastructure gaps are compounding demand risks, with fewer than 400 fast-charging ports completed under the federal government’s $7.5 billion National Electric Vehicle Infrastructure program by midyear, which falls significantly short of targets. This shortfall is likely to hinder adoption, particularly in areas outside metropolitan regions.

Globally, the momentum remains strong, with China now accounting for over 60% of global new energy vehicle output, thanks to vertically integrated supply chains and consistent model releases. In Europe, Chinese brands are increasing their market share despite new tariffs, providing low-cost BEVs that challenge traditional automakers.

The divergence in market performance could pose challenges for the energy sector as well. Utilities anticipating increased electricity demand from EVs may need to adjust their projections downward. Additionally, battery producers that expanded U.S. production could face excess capacity if demand weakens. Conversely, companies connected to Chinese or European supply chains may continue to benefit from sustained global growth.

While Q3 may offer a brief increase in U.S. volumes, the overall market remains fragile. The ability of Tesla to successfully reposition itself with a more affordable model or fulfill its promises regarding autonomous ride-hailing services will be critical factors for observers aiming to predict the U.S. market’s trajectory. Globally, EVs are becoming increasingly mainstream, but for now, the U.S. is struggling to keep pace.