When the $7,500 federal electric vehicle tax credit officially expired on September 30, 2025, it didn't just remove a financial incentive for consumers—it fundamentally altered the strategic calculus for America's largest automakers.

Ford CEO Jim Farley had predicted the moment would cut the EV market in half. The actual impact may be even more profound: U.S. EV sales peaked at 10.3% of the new vehicle market in September, then plummeted to preliminary estimates of just 5.2% during the fourth quarter.

Welcome to the era of EV realism.

Ford's $19.5 Billion Reset

Ford is recording approximately $19.5 billion in special items related to a fundamental restructuring of its business priorities—a staggering admission that the company's aggressive EV push may have been premature.

The pivot includes:

  • Refocusing investments on hybrid vehicles, including plug-in models, rather than pure EVs
  • Canceling a next-generation large all-electric truck program in favor of smaller, more affordable EVs
  • Rebalancing investments toward core products like traditional trucks and SUVs

"The industry was euphoric about the EV segment in the early 2020s, but consumer demand never took off as much as expected. Now, Detroit automakers are refocusing on large gas-guzzling trucks and SUVs."

— Industry analysis

For Ford, this represents more than a financial adjustment—it's an acknowledgment that policies, not consumers, were driving much of the EV push.

GM's Cautious Recalibration

General Motors has disclosed a $1.6 billion impact from its own EV pullback, with more write-downs expected. The company, long seen as the domestic leader in the electrification push, is taking a more nuanced approach than Ford.

GM continues selling current EV models but has paused major expansions. Leadership has hinted at introducing plug-in hybrids soon while boosting output of traditional large vehicles that actually generate profits.

The bright spot: GM is still moving forward with vehicles like the new Chevrolet Bolt, priced around $35,000, betting that affordability will matter more than ever in a post-subsidy world.

The Numbers Tell the Story

The contrast between expectation and reality is stark:

  • Q3 2025 saw record EV sales of 438,000 units as buyers rushed to beat expiring incentives
  • Q4 preliminary estimates show EV market share cut roughly in half
  • Cox Automotive forecasts continued weakness through early 2026
  • North American EV sales in 2025 were down 1% to 1.7 million units as of November 30

The Global Context Matters

While Detroit pulls back, the global EV market continues to grow. Global EV sales hit 18.5 million units in the first 11 months of 2025, up 21% year-over-year according to Rho Motion.

The difference? Government support remains robust in Europe and China, where subsidies, charging infrastructure investment, and emissions mandates continue to drive adoption. In the U.S., the market is now being left to its own devices—and it's choosing differently.

What This Means for Investors

The EV pivot creates both risks and opportunities:

Risks:

  • Billions in sunk costs for EV factories and technology that may take years to generate returns
  • Reputational damage if the pivot is seen as abandoning environmental commitments
  • Potential regulatory challenges if emissions standards tighten

Opportunities:

  • Improved near-term profitability as companies refocus on high-margin trucks and SUVs
  • More disciplined capital allocation
  • Hybrid vehicles could capture the "EV-curious" consumer who isn't ready for full electric

The Hybrid Middle Ground

Both Ford and GM are betting heavily on hybrids as a bridge technology. The logic is straightforward: hybrids offer improved fuel economy and a "green" halo without requiring the charging infrastructure that remains a barrier for many American consumers.

Toyota, which was criticized for years for its hybrid focus while competitors went all-in on EVs, is looking increasingly prescient. The company's hybrid-heavy strategy generated robust profits while rivals burned cash on electric vehicles.

The 2026 Outlook

Analysts expect EV adoption to stabilize around 5% to 7% of new vehicle sales in the near term—well below the ambitious targets automakers set just a few years ago. Some observers advise "don't sleep on the U.S. EV market," noting that infrastructure improvements and battery cost reductions could eventually reignite demand.

But for now, Ford and GM are focused on survival, not transformation. The era of EVs taking over the American auto market has been postponed indefinitely.

The Bottom Line

The expiration of the EV tax credit has exposed a fundamental truth: American consumers, given the choice, aren't ready to embrace electric vehicles at the scale the industry anticipated. The subsidies weren't just sweetening the deal—they were creating artificial demand.

For investors, the message is clear: expect Ford and GM to prioritize profitability over electrification in 2026. The stocks may benefit in the short term from improved margins on traditional vehicles, but the long-term competitive position against Chinese EV giants like BYD remains uncertain.

The EV revolution isn't over—but it's definitely been delayed.