On the Dash:
- U.S. new-vehicle sales grew 2.4% in 2025, reaching 16.2 million units despite major policy disruptions.
- EV demand peaked before tax credits expired, while hybrid sales surged nearly 28% year over year.
- Automakers absorbed most tariff costs, keeping price and payment increases relatively modest.
U.S. new-vehicle sales totaled 16.2 million units in 2025, marking a 2.4% increase from 2024, according to the NADA. The gain came despite major policy disruptions, including tariffs on imported vehicles and parts and the expiration of federal electric vehicle tax credits.
Consumer behavior shifted throughout the year as buyers reacted to these changes. Tariff announcements prompted many shoppers to advance purchases during the second quarter, while the expiration of EV tax credits on Sept. 30 fueled a surge in third-quarter demand. That activity drove battery-electric vehicles to a record monthly market share of 11.8% in September.
Momentum for EVs slowed after incentives ended. By December, BEV market share dropped to 5.9%, down 5.9 percentage points from the September peak. For the full year, BEV sales reached 1.26 million units, up 1.2% from 2024. However, BEV market share declined slightly year over year to 7.7%.
Hybrid vehicles gained traction as EV growth cooled. Conventional hybrid sales climbed to 2.05 million units in 2025, a 27.6% increase from the prior year. Shifts in regulation and buyer preferences pushed automakers to align product strategies more closely with near-term consumer demand.
Vehicle pricing remained relatively stable despite tariff pressures. Most automakers absorbed higher costs, limiting the impact on consumers. According to J.D. Power, the average transaction price for a new light vehicle in December reached $47,104, up 1.5% from a year earlier.
Monthly payments rose more modestly due to easing interest rates. The average new-vehicle finance payment increased to $776 in December, up $22 year over year. J.D. Power estimated the average interest rate at 5.84%, down 32 basis points from December 2024.
Looking ahead, the industry expects steady conditions in 2026. New-vehicle sales are forecast at 16.0 million units, supported by tax-season spending tied to recently passed legislation. However, a softer labor market could temper demand as some consumers delay purchases.
