More U.S. consumers are choosing battery electric vehicles and it appears policy changes may simply slow the transition but not discourage purchases, experts say.
In the final three months of 2024, 365,824 electric vehicles were sold in the U.S., a best-ever quarterly sales mark, according to Cox Automotive’s Kelley Blue Book. For the year, 1.3 million EVs were purchased, a 7.3% year-over-year increase.
A growing number of drivers are shifting to electrified powertrains, Cox Automotive said. Sales of pure EVs, for example, are forecast to represent nearly 10% of all U.S. purchases this year, up from 7.5% in 2024, Cox Automotive analysts said in a December outlook for 2025.
However, recent actions by President Donald Trump that may eliminate government tax credits and place tariffs on imported vehicles and automotive parts could change that forecast, especially in the latter half of the year, Cox Automotive said in its January auto sales forecast.
Despite potential headwinds, consumer preferences will continue shaping the marketplace, Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said in a forecast call in December.
Automakers are listening
Consumer preference is influencing decision making at General Motors. During the automaker’s Q4 earnings call on Jan. 28, CFO Paul Jacobson said more buyers are opting for the company’s EVs.
“As a matter of just corporate strategy, we've got to work and we've got to be focused on making sure we get those to profitability,” he said.
GM produced 189,000 BEVs in North America last year and reported 43,982 EV sales in Q4, which the automaker estimates was roughly 12% of all U.S. EV sales for the period.
Growing EV sales is a priority for GM. The company is exploring making its Super Cruise hands-free driving system standard equipment on its luxury line of Cadillac EVs. Emphasis is being placed on the luxury segment since it has seen higher EV adoption rates, CEO Mary Barra said to analysts.
“We are being guided by the customer and will continue to be,” she said. “And these new Cadillacs stand out with their beautiful designs, advanced technology and customer-focused innovation.”
But the automaker also is looking to integrate Super Cruise across all of its brands.
The outlook for EVs, hybrids
While GM believes consumers will be drawn to alternative powered vehicles with advanced technology, it’s difficult to overlook policy shifts by the Trump Administration and the potential impact it could have on consumers, according to S&P Global’s 2025 auto industry credit outlook.
EV demand could experience downward pressure, depending on the magnitude of the changes to consumer and production tax credits implemented by the administration, S&P Global said.
“We think the next wave of buyers will be more price-sensitive and depend on significant battery range improvements, charging infrastructure, and technology,” S&P Global wrote.
If incentives disappear and expansion of charging networks slows, it could benefit sales of hybrid vehicles, which saw 37% growth in the U.S. in 2024, according to S&P Global.
EV production was initially expected to grow by 33% globally at the start of the year, Jay Cushing, senior bond analyst with Gimme Credit, said in an email to Automotive Dive. Now that figure is expected to be around 12% for 2024, as automakers pivot to building more hybrids.
EV penetration slowed in North America in 2024, he said. Because of U.S. policy changes, automakers may have to rethink production shifts.
“In many cases OEMs are pivoting a bit from full EV toward incremental solutions like hybrids and plug in hybrids,” Cushing said.
With automakers releasing more EV models, it’s inevitable more buyers will gravitate to the segment, Alex Geach, senior underwriter in the automotive sector for Atradius Trade Credit Insurance, said in an email. But consumer anxiety about range and lack of charging infrastructure continues to slow the transition, he said.
“The expectation is that EV volumes continue to grow as more and more products become available but the transition across to EVs might take a bit longer,” Geach said.
Though EV adoption may cool in the near-team, younger consumers want battery electric vehicles, Dorothy Ashford, vice president of enterprise accounts, automotive, for ITS Logistics, said in an email.
“I personally think the allure of a BEV is a perfect market fit for first-time drivers and younger drivers,” she said. “This would seed the future of EV because these first-time drivers would be hooked—and they are already there. It's a huge opportunity.”
