On Wednesday, federal EV tax credits in the US officially came to an end.

Those credits, expanded and extended in the 2022 Inflation Reduction Act, gave drivers up to $7,500 in credits toward the purchase of a new electric vehicle. They’ve been a major force in cutting the up-front costs of EVs, pushing more people toward purchasing them and giving automakers confidence that demand would be strong.

The tax credits’ demise comes at a time when battery-electric vehicles still make up a small percentage of new vehicle sales in the country. And transportation is a major contributor to US climate pollution, with cars, trucks, ships, trains, and planes together making up roughly 30% of total greenhouse-gas emissions.

To anticipate what’s next for the US EV market, we can look to countries like Germany, which have ended similar subsidy programs. (Spoiler alert: It’s probably going to be a rough end to the year.)

When you factor in fuel savings, the lifetime cost of an EV can already be lower than that of a gas-powered vehicle today. But EVs can have a higher up-front cost, which is why some governments offer a tax credit or rebate that can help boost adoption for the technology.

In 2016, Germany kicked off a national incentive program to encourage EV sales. While the program was active, drivers could get grants of up to about €6,000 toward the purchase of a new battery-electric or plug-in hybrid vehicle.

Eventually, the government began pulling back the credits. Support for plug-in hybrids ended in 2022, and commercial buyers lost eligibility in September 2023. Then the entire program came to a screeching halt in December 2023, when the government announced it would be ending the incentives with about one week’s notice.

Monthly sales data shows the fingerprints of those changes. In each case where there’s a contraction of public support, there’s a peak in sales just before a cutback, then a crash after. These short-term effects can be dramatic: There were about half as many battery-electric vehicles sold in Germany in January 2024 than there were in December 2023. 

Ultimately, it’s not terribly surprising that there are local effects around these policy changes. “The question is really how long this decline will last, and how slowly any recovery in the growth will be,” Robbie Andrew, a senior researcher at the CICERO Center for International Climate Research in Norway who collects EV sales data, said in an email. 

When I spoke to experts (including Andrew) for a story last year, several told me that Germany’s subsidies were ending too soon, and that they were concerned about what cutting off support early would mean for the long-term prospects of the technology in the country. And Germany was much further along than the US, with EVs making up 20% of new vehicle sales—twice the American proportion.

EV growth did see a longer-term backslide in Germany after the end of the subsidies. Battery-electric vehicles made up 13.5% of new registrations in 2024, down from 18.5% the year before, and the UK also passed Germany to become Europe’s largest EV market. 

Things have improved this year, with sales in the first half beating records set in 2023. But growth would need to pick up significantly for Germany to reach its goal of getting 15 million battery-electric vehicles registered in the country by 2030. As of January 2025, that number was just 1.65 million. 

According to early projections, the end of tax credits in the US could significantly slow progress on EVs and, by extension, on cutting emissions. Sales of battery-electric vehicles could be about 40% lower in 2030 without the credits than what we’d see with them, according to one analysis by Princeton University’s Zero Lab.

Some US states still have their own incentive programs for people looking to buy electric vehicles. But without federal support, the US is likely to continue lagging behind global EV leaders like China. 

As Andrew put it: “From a climate perspective, with road transport responsible for almost a quarter of US total emissions, leaving the low-hanging fruit on the tree is a significant setback.” 

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