Last year, the U.S. government allowed the $7,500 tax credit for new electric vehicles and the $4,000 credit for used ones to expire at the end of September, leading to an inflated buying rush through the first three quarters of the year, followed by a dramatic drop-off in the final quarter. U.S. EV market share fell to 5.7% in the fourth quarter of 2025, down from 8.7% a year prior and 10.5%, the all-time high hit during the third quarter, according to CarEdge.Meanwhile, in the European Union, battery electric vehicles accounted for 20% of all new passenger car registrations in January 2026, up from 17% a year prior. That is also double the market share the 27-country bloc reported three years earlier, according to the European Alternative Fuels Observatory. Back in the U.S., the decline in demand has endured through the first half of the year, despite elevated gas prices caused by the Iran War making EV purchases more financially attractive. So what gives?Well, according to injury lawyer Brian White, EVs are still way more expensive than their internal combustion cousins, and the extra costs don’t stop at the sticker price.EVs have extra costs ICE vehicles don’tIt’s not like Americans are completely against electrified vehicles. When combined with plug-in hybrids, electrified vehicle sales represent 20% of the total market, according to Edmunds. While that pales in comparison to the 69% market share in the EU, one-in-five isn’t a bad ratio. But one of the biggest issues with EVs is that they get old fast. Much faster than gas-powered vehicles. The average 5-year depreciation cost across all vehicle types is around 46%, according to Recharged, but recent studies show EVs lose around 60% of their value over that time period. Purely gas vehicles typically lose between 40% and 50% over the first five years. However, the financial ramificaitons of that depreceiation is somewhat offset by studies showing that EVs typically cost between 35% and 50% less in routine maintenance since there is no need for oil changes, exhause repairs on any of the multitude of other issues that come with internal combustion engines. EV owners typically spend only between $150 and $300 a year on basic service, compared to between $900 and $1,800 for gas-powered vehicles. One of the biggest causes of depreciation for EVs is rapid tech turnover. With all of the technology powering them, EVs become outdated faster, according to White. EVs are also 20% more expensive to repair after a collission than gas powered vehicles.
Americans have cooled on EV purchases in 2026.Scharfsinn86 / Getty Images
Which states sell EVs the cheapest?Purchasing and owning an EV is still more expensive that a gas vehicle, so it’s no wonder that there is some hesitancy from most U.S. consumers. That is where the tax credit was supposed to com in, pushing potential EV purchasers worried about the added costs over the line. There was so much demand ahead of the end of the tax credits that J.D.Power data from last year showed U.S. EV transaction prices briefly fell below gasoline vehicles for the first time. As recently as 2023, EVs closing costs were $16,000 higher.But now that the federal tax credit has expired, 17 U.S. states continue to offer state tax incentives ranging from $1,500 in Rhode Island to $7,500 in Oregon and Maine. However, 40 states impose higher annual registration fees on EVs and some hybrids to offset lost gas tax revenue. Those fees range from $50 in Hawaii and South Dakota to $260 in New Jersey.California and Alaska ended their EV tax credit programs while Maryland, Montana, New Hampshire, New Jersey, Pennsylvania, Rhode Island, Texas, and Vermont introduced new EV registration fees. Tennessee, Kansas, Indiana, Nebraska, Wisconsin and North Carolina have all increased their fees. Eleven states offer EV purchase incentives and impose higher registration fees than those applied to gas vehicles. Related: Ford begins testing tech that will change Americans’ minds about EVs