In the first two months of this year, the U.S. market witnessed a continued slump in electric vehicle (EV) sales, a trend that has persisted since the elimination of the $7,500 EV subsidy in 2025. This development underscores the substantial influence of subsidy removal on the U.S. EV market and sheds light on the industry's heavy reliance on such financial incentives.

Data indicates that EV sales in the U.S. plummeted by 18% in February this year, with a 22% drop recorded for the first two months of the year. Interestingly, this can be viewed as a somewhat positive sign, as the decline in February had significantly narrowed compared to previous months.

Following the cancellation of the $7,500 EV subsidy in September 2025, U.S. EV sales took a sharp nosedive in the fourth quarter of that year, ultimately contributing to an annual sales decline. This downward trajectory has persisted, highlighting the pivotal role subsidies played in bolstering the U.S. EV market.

Data further reveals that the average price gap between fuel-powered vehicles and EVs in the U.S. market stood at $6,500 in February, reinforcing the notion that subsidies were a crucial factor in enticing a select group of consumers to opt for EVs. It was the $7,500 subsidy that effectively made EVs $1,000 cheaper than their fuel-powered counterparts, thereby attracting this niche consumer base.

Indeed, EVs have always constituted a minority segment in the U.S. market, accounting for a mere 7.8% of new vehicle sales in the first nine months of 2025. This figure dipped to 7.56% in the first two months of this year. As a niche market, EVs are now facing a decline amid subsidy withdrawal, sparking concerns within the industry that they may struggle to maintain a foothold in the U.S. market.

The struggle of EVs to gain market share in the U.S. is not solely attributed to pricing issues. Many of the technological advantages touted by U.S. EV companies have failed to materialize, leading consumers to question the innovative prowess of these firms.

Intelligent driving is undeniably the killer app for EVs. Founders of U.S. EV companies have long hyped the imminent arrival of autonomous driving, with the internet awash with videos of owners dozing off while their vehicles are steered by intelligent driving systems. However, the reality is that U.S. EV companies have yet to label the intelligent driving technology offered to individual consumers as Level 3 or higher autonomous driving, and the drivers in these videos may be breaking the law.

Adding to consumer skepticism in the U.S. is the fact that the U.S. Department of Transportation has accused U.S. EV companies of overstating their intelligent driving capabilities and has imposed fines. Earlier, a federal judge awarded $243 million in punitive damages against a U.S. EV company for a 2019 accident, citing the company's exaggerated claims about its intelligent driving technology that misled consumers.

Moreover, features such as hidden door handles and the elimination of numerous physical buttons inside the vehicle have drawn criticism for potentially increasing accident risks. Despite these concerns and the unfulfilled promise of autonomous driving, the company persists in planning to launch vehicles devoid of steering wheels, door handles, and other equipment, a move that is further suspected to be a marketing ploy to garner attention.

As EVs suffer a severe setback in the U.S. market, Japanese automakers are capitalizing on the opportunity to capture market share, particularly with their hybrid vehicles. In February, hybrid vehicle sales in the U.S. market surged by 10% year-on-year to 162,000 units, with Toyota commanding approximately 40% of the hybrid vehicle market. This underscores the growing recognition of Toyota's fuel-efficient hybrid technology by U.S. consumers after more than two decades of development.

In contrast, only 73,600 pure EVs and a mere 14,100 plug-in hybrid vehicles were sold in the U.S. market in February, indicating that the combined sales of EVs and plug-in hybrids were just slightly more than half of those of fuel-efficient hybrids.

With EV sales declining in the U.S. market, Ford, Honda, and other automakers are significantly scaling back their EV business plans. Both U.S. and European automakers are now planning to intensify their research and development efforts in fuel-efficient hybrid technologies. However, their current mild hybrid technology, which lags behind Japanese hybrid technology in terms of advancement, achieves fuel consumption as low as 5.3 liters per 100 kilometers, while Japanese fuel-efficient hybrid technology reduces consumption to a mere 4 liters per 100 kilometers.