The American electric vehicle market had a very turbulent year. Finally, things seem to be looking up, at least a bit.
Used electric vehicle sales saw a 12% increase in the first three months of the year, according to Cox Automotive data reported by the Wall Street Journal this weekend.
That’s some welcome news, considering that electric vehicle sales tanked late last year after President Trump slashed the up to $7,500 electric vehicle tax credit and effectively sent EV prices soaring in the United States. Major automakers like Hyundai and Kia reported massive declines in EV sales following the end of the tax credit. In February, Ford reported its largest net loss since the recession due to the $4.8 billion the auto giant’s EV division lost in 2025. Accompanying these financial losses were announcements from automakers that they were pulling back from previous EV investment commitments, killing some products, and shutting down EV manufacturing in key factories.
Trump’s decision to kill the tax credit had the biggest impact on those wanting to buy electric vehicles but did not have the budget for luxury cars. Now, a few months after the end of the tax credits, the used EV market might be turning into a buyer’s market.
The Wall Street Journal reported that there was a surge of off-lease electric vehicles in the market, with the cars going for notably low prices. That’s something that analysts have been predicting for a while now. The EV tax credit went into effect in late 2022, translating to a surge in leases in late 2022 and well into 2023. Now, those lease returns are starting to hit the market.
Plus, according to a study published earlier this year, three-year-old used EVs are less expensive to own over a 10-year lifespan than their new or used gasoline-powered counterparts.
While probably not the main driver of the recent increase in sales, there is something else that’s also likely to benefit the EV market in the short run, and that’s the skyrocketing of gas prices.
Gas prices have been steadily soaring around the world after Iran closed most traffic through the Strait of Hormuz, a critical oil chokepoint, in retaliation for U.S. and Israeli military strikes that have been pounding the country since February 28. In the United States, gas has climbed above $4, with some locations in Manhattan even seeing $6.99 per gallon.
Compared to gasoline-powered vehicles, electric vehicles appear to be well suited to weather the volatility of geopolitics. Case in point: while car sales in the U.S. slid sharply in March, Chinese car exports accelerated despite shipping hurdles, thanks in large part to the country’s booming EV industry. Morgan Stanley analysts recently estimated that with gas prices at $4, it is 60% cheaper to power an EV than a car that is reliant on gas.
According to car-buying platform CarEdge, rising gas prices have driven some interest in EVs in the United States, with online searches for EV models up 20% in just the first three weeks of the war. But experts say it will take months for the rising gas prices to actually swing a substantial amount of buyers firmly into EV territory.
The good news for the EV industry and bad news for consumers is that high gas prices might be here to stay for a bit longer than we anticipated. Even after a permanent ceasefire is reached —which might not be any time soon considering that the tension between the two nations seems to be escalating once again—it will take months for the oil flow through the Strait of Hormuz and global gas prices to return to normal.
