Tesla CEO Elon Musk has warned that the end of U.S. government support for electric vehicles could lead to “a few rough quarters,” following the automaker’s steepest revenue and delivery decline in more than a decade. Tesla is now relying on a long-promised affordable model and its autonomous ride-hailing roadmap to regain momentum, but immediate growth prospects look dim in the U.S. market.
The caution comes as global EV sales continue to rise. According to Rho Motion, 9.1 million EVs were sold worldwide in the first half of 2025, up 28% YoY. Not surprisingly, China led, with 5.5 million units, followed by Europe with 2 million. By contrast, North America added just 900,000 units, a modest 3% gain over last year, as reported by Electrek.
In contrast to strong global figures, the U.S. market is faltering. Data from Cox Automotive shows that EV sales in the U.S. fell by 6.3% in the second quarter compared to Q2 2024, totaling 310,839 units. This marked only the third quarterly year-on-year decline since EVs gained mainstream traction. Incentives remained high, averaging $8,500 per vehicle in June (nearly 15% of sticker price), but failed to spark additional demand.
Tesla’s global deliveries dropped to 384,122 vehicles in Q2, down 13.5% YoY, according to Reuters. Meanwhile, BYD reported a 16% increase in global deliveries and a 46% jump in battery-electric sales, overtaking Tesla in global BEV market share for the quarter.
General Motors delivered 46,280 EVs in Q2, more than doubling its volume from a year ago, and is now the second-largest EV seller in the U.S. Ford also increased sales but has slowed EV investment under the weight of cost pressures and revised capital priorities.
The U.S. policy environment is shifting rapidly. The “Big, Beautiful Bill”, signed by President Donald Trump earlier this month, eliminates the $7,500 federal EV tax credit as of October 1. It also ends credits for used EVs and home charger installations. Analysts expect a short-term Q3 bump from consumers rushing to claim benefits before the deadline, followed by a deeper Q4 slump, according to Reuters.
Infrastructure gaps are compounding demand risks. As of midyear, fewer than 400 fast-charging ports had been completed under the federal government’s $7.5 billion National Electric Vehicle Infrastructure program, far short of targets. Reuters notes that this shortfall could dampen adoption, especially outside metro areas.
Globally, momentum remains strong. China now accounts for more than 60% of global new energy vehicle output, aided by vertically integrated supply chains and steady model releases. In Europe, Chinese brands are gaining share despite new tariffs, offering low-cost BEVs that undercut traditional automakers.
For the energy sector, this divergence could bode ill. Utilities banking on rising EV-related electricity demand may need to revise projections downward. Battery producers that scaled up U.S. production could face excess capacity if demand softens. At the same time, firms tied to Chinese or European supply chains might just continue to benefit from sustained global growth.
Q3 may deliver a temporary lift in U.S. volumes, but this is now a fairly fragile game. Tesla’s ability to reposition with a lower-cost model, or make good on its robotaxi promises, will be the key thing to watch for observers looking to predict U.S. trajectory. Globally, EVs are increasingly embedded in the mainstream. But for now, the U.S. isn’t taking the lead. Instead, it’s barely managing to keep pace.
By Michael Kern for Oilprice.com