Ford CEO Jim Farley is preparing for a steep decline in U.S. electric vehicle sales following the expiration of a key federal tax credit this week. Farley said Tuesday that EVs’ market share, which recently hit a record 10–12%, could fall to around 5% once the $7,500 federal incentive disappears, according to CNBC.
“It’s going to be a vibrant industry, but it’s going to be smaller—way smaller than we thought,” Farley told attendees at a Ford event in Detroit. He pointed to the end of the tax credit and the anticipated rollback of tailpipe emission rules as the main drivers behind the shift.
Farley also noted that many consumers remain more comfortable with hybrid vehicles than fully electric models. High price tags are another challenge—Ford’s EVs such as the F-150 Lightning and Mustang Mach-E can exceed $90,000. While the federal tax break sparked a surge in EV sales this year, that momentum may fade. Cox Automotive estimates third-quarter EV sales will hit a record 410,000 units, up 21% from last year, but much of that growth may be the result of buyers rushing to purchase before the incentive ends.
“Customers are pesky. They surprise you. They definitely surprised us,” Farley said. “Customers are not interested in the $75,000 electric vehicle.”
Industry analysts agree sales will likely drop sharply in the short term. Sam Abuelsamid of Telemetry, an automotive communications firm, expects EV sales to be cut in half, but predicts a rebound once more affordable models—such as the Nissan Leaf and Chevrolet Bolt—enter the market. “They’re going to be in that $30,000 to mid-$30,000 range,” Abuelsamid said. “As we get those more affordable EV models with solid range, a lot of EV buyers will give them serious consideration.”