One in four: That’s how many new vehicles sold in 2025 could be powered by electricity.
That’s according to Cox Automotive’s 2025 forecast, which is mostly upbeat, despite lots of uncertainty around possible federal policy changes that would have major implications for the auto industry.
“We anticipate further growth in electrification, with one out of four vehicles being electrified and pure battery-electric vehicle sales reaching 10% of market share,” Stephanie Valdez Streaty, Cox’s director of industry insights, said on a December call. “However, 2025 will also be a year of adjustment, with potential changes to incentives, regulatory guidelines, and consumer preferences shaping the EV market landscape.”
By the numbers: Analysts expect 2025 to be the best year for new-vehicle sales since 2019.
Cox forecast 16.3 million new light-vehicle sales for the year, a 3% YoY increase over 2024. Similarly, Edmunds is calling for 16.2 million sales.
Cox analysts cited numerous factors to explain their upbeat outlook, including post-election gains in consumer and business confidence, lower interest rates, projections for solid economic growth this year, expected wage growth, and the labor market’s continued strength. Plus, consumers hoping to avoid tariff-driven price increases could fuel a short-term vehicle-buying spree.
“The tariffs proposed by the incoming president might not be more than negotiation tactics, but if they were enacted, they would likely affect the costs of nearly all goods and services––not just car prices,” Jessica Caldwell, Edmunds’ head of insights, said in a statement. “Consumers would have less disposable income and automakers would likely need to increase incentive spending just to move metal.”
It’s electric: Trump also has vowed to roll back numerous federal policies that support the electric transition. He’s widely expected to get rid of a $7,500 consumer tax credit on EV purchases, for example, and to weaken fuel efficiency and tailpipe emissions standards. Analysts also will be watching the new administration’s likely fight with the state of California over its ability to set its own environmental standards.
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However, they’re still optimistic about where the EV market is headed in 2025––especially, they said, because it could take time for some of those policies to come to fruition.
Cox analysts expect 1.5 million EV sales in 2025 and for EVs to capture a 10% market share. They predict gas-electric hybrids and plug-in hybrids will grab 15% of the market, while combustion engine vehicles could hit a record low market share of 75%.
Those expectations follow another record-setting, if bumpy, year for US EV sales, which reached 1.3 million units in 2024, according to Cox. EVs made up 8% of the new-vehicle market. Hybrids, meanwhile, surged in popularity, with sales up 26% YoY. ICE sales were down 2%.
Analysts feel good about what’s in store for EVs this year in part because many states will continue to offer their own incentives regardless of what happens at the federal level, charging infrastructure is gradually getting better, and at least 15 new EV models are slated to hit the market.
“In 2025, new EV sales will continue to rise,” Valdez Streaty said. “The introduction of new models, improved charging infrastructure, and advancements in battery technology will help drive this continued adoption.”
Still, analysts acknowledged that their EV forecast could change if federal incentives indeed go away.
“All told,” Cox analysts said, “we feel electrified vehicles will move into the mainstream in 2025.”