New EV Sales Crater 28% in Q1 2026 — But There's a Flip Side
Cox Automotive data shows new battery-electric sales fell sharply in the first quarter as the federal tax credit disappeared and tariff uncertainty weighed on buyers. The saving grace? A booming used EV market.
The numbers are in, and they’re not pretty for the EV industry. New battery-electric vehicle sales in the United States dropped 28% year-over-year in the first quarter of 2026, falling to approximately 212,600 units, according to data released by Cox Automotive in late March. That’s down from roughly 295,000 units in Q1 2025, and it represents the sharpest year-over-year decline since EV adoption started gaining meaningful traction in the U.S. market.
The culprits are well-documented at this point: the expiration of the federal EV tax credit at the end of 2025 removed a significant purchase incentive, tariff uncertainty has pushed automakers to pause or cancel EV programs, and consumer sentiment around EV affordability has softened as average transaction prices remain elevated despite broader vehicle market pressures.
What the Drop Hides
The headline number obscures some important nuance. Total light-vehicle sales overall fell about 5% in Q1 — so EVs are declining faster than the broader market, but they’re not collapsing in isolation. The EV share of total U.S. light-vehicle sales now sits around 5-6%, down from the 7-8% range some analysts had projected heading into the year.
GM remained the No. 2 EV seller in the U.S. market behind Tesla, with 25,851 EVs sold in Q1 — up 2.5% from Q4 2025, suggesting GM’s EV portfolio is at least finding a floor even as the overall market softens. Hyundai and Kia combined sold just over 18,000 EVs in the quarter, a decline of roughly 21% versus the same period last year.
Tesla’s Q1 numbers haven’t been fully broken out in the Cox data, but industry watchers expect the automaker to retain its dominant share of the EV segment even as the total market contracts.
The Other Side: Used EVs Are Booming
Here’s the part of the story that doesn’t fit the narrative of an EV market in freefall: used EV sales jumped 12% in Q1, hitting approximately 93,500 units — near record levels, according to data cited by Electrek. As new EV prices remain stubbornly high and lease returns flood the market, used EVs are increasingly attractive to buyers who want electric ownership without the $45,000+ price of admission.
This is a meaningful shift. Two years ago, used EV prices were still elevated due to post-pandemic supply constraints. Now, a growing number of off-lease EVs — particularly Tesla Model 3s and Model Ys from 2021-2023 — are hitting dealer lots and online marketplaces at prices that are genuinely competitive with comparable combustion vehicles.
The crossover point is approaching — or in some segments, has arrived. A three-year-old Tesla Model 3 with 40,000 miles can now be found in the low-to-mid $20,000s, making the monthly cost of ownership (including financing and charging) competitive with a new Toyota Camry. That’s a fundamentally different equation than it was even 18 months ago.
What Comes Next
Cox Automotive’s analysts noted early signs that the EV market may be finding a floor. Inventory levels are stabilizing. Automakers that remain committed to EVs — GM, Hyundai/Kia despite their hybrid pivot, BMW — are concentrating on more affordable, mass-market EVs rather than the high-end performance sedans that dominated earlier in the decade.
The tariff situation remains the wild card. If the current import levies persist through the year, expect further upward pressure on EV prices at exactly the moment the market is trying to bring costs down. The federal tax credit’s absence is a structural headwind that isn’t going away. And the industry has essentially admitted that $7,500 mattered a lot to the consumers it was trying to reach.
Whether the used EV boom can sustain the broader electrification story while the new EV market recalibrates is the defining question for the second half of 2026.
Get into an EV without the new-car price tag:
Related reading:
- Used EV Flood: 300K Off-Lease EVs Hitting the Market — why the used EV market is about to explode
- Toyota bZ Surprise Sales Surge — one brand bucking the EV trend in Q1
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