On the Dash:
- EV financing jumped to 11.4% in Q3 and remained above 13% in early October due to incentive timing and contract backlogs.
- Dealers report relief at reducing EV inventories and anticipate lower demand without the $7,500 federal tax credit.
- Dealer sentiment toward the EV market has dropped significantly, hitting an index score of 24 for Q4 2025.
New electric vehicle financing surged in the third quarter as consumers rushed to secure the $7,500 federal tax credit before it expired on September 30. According to newly released data from Experian Automotive, that momentum carried into early October despite expectations that EV demand would drop once the incentive ended.
Experian’s latest State of the Auto Finance Market report shows that EVs accounted for 11.4% of new-purchase finance originations in the third quarter. That marked an increase from 10.1% a year earlier. Early October data indicated that EV financing continued above 13%, likely reflecting delayed contract processing from the last-minute push to meet the deadline.
The Internal Revenue Service helped extend the activity by confirming in August that customers who placed money down and signed a binding contract before September 30 would still qualify for the incentive, even if the vehicle was delivered later. That ruling contributed to a backlog as many of those transactions were finalized in October.
Still, analysts do not expect the higher share to hold. Publicly traded dealer groups have reported relief at selling down EV inventories that had become difficult to move at a profit after the tax credit expired. With fewer incentives available and continued uncertainties in consumer demand, dealers anticipate softer EV performance in the months ahead.
That outlook aligns with new findings from Cox Automotive’s Dealer Sentiment Index for the fourth quarter of 2025. Dealers lowered their expectations for the EV market in their area, posting a score of 24 on a 100-point scale. Sentiment has fallen sharply from a score of 39 one year earlier and from 64 in the second quarter of 2022, when optimism around EV adoption peaked.
The latest data highlights a split between short-term financing activity and longer-term confidence levels. While incentives and contract timing boosted Q3 and early October originations, dealers remain cautious as the market adjusts to a landscape without the federal tax credit.
