The EV Market Enters Its 'Reset Era' in October as Federal Tax Credits Expire and Prices Rise

• Early indicators suggest EV sales activity cooled in October after a record-setting September, reflecting how the end of the $7,500 lease credit reshaped shopper timing and demand.
• Average transaction prices for new EVs climbed to a near-record high of $65,021 in October, suggesting that October’s EV buyers were less deal-driven and more committed to embracing electrification.
• EV consideration on Edmunds dipped modestly in October but remains steady, showing that consumer interest in EVs hasn’t disappeared despite affordability challenges. 

September's EV activity reached a fever pitch across the U.S. as shoppers hurried to take advantage of the expiring $7,500 federal tax credit for EV leases and purchases. The deadline spurred a wave of interest and record-breaking sales across a number of brands — a clear reflection of how closely EV demand remains tied to affordability and incentives.

With the credit now off the table, the market appears to be settling into a more natural rhythm. October marks the start of a reset period: one defined less by incentive-driven urgency and more by buyers motivated by genuine interest in EV ownership.

Automakers and dealers are beginning to adjust to a post-incentive environment, offering a clearer look at what sustainable EV demand might look like moving forward.

EV leasing and pricing trends show a market finding balance

Leasing has been the backbone of EV growth largely because of the $7,500 federal tax credit that made it the most affordable path into an electric vehicle. That dynamic hit a fever pitch this summer as automakers and dealers leaned heavily on lease offers to draw shoppers in before the incentive expired. In September, leases accounted for roughly 71% of financed EV purchases¹ — underscoring how pivotal the credit had become in sustaining demand.

With the credit now gone, leasing eased to around 60% in October 2025. While that marks a step down from the elevated levels of prior months, it still signals an overreliance on leasing. A truly balanced market would likely see lease penetration closer to 30%, but that's difficult to achieve at this stage given ongoing consumer hesitancy around long-term EV ownership and depreciation. For now, leasing remains the most comfortable entry point for many shoppers, even as the market begins to wean its dependence on leasing overall.  

At the same time, average transaction prices (ATPs) for new EV purchases climbed to $65,021, up from $60,167 in September, reflecting tighter discounting and a higher share of premium EV models. October's ATP ranks as the second-highest on record, trailing only May 2023's peak of $65,381. The uptick suggests that October buyers were less motivated by short-term deals and more confident in paying for the technology, performance and long-term value EVs offer.

Source: Edmunds. Data refers to fully electric vehicles only and includes dealership transactions and excludes direct-to-consumer brands. Figures are preliminary and subject to slight revisions as full October data is finalized.

Inventory and financing dynamics add pressure, reshape buyer behavior

October was always expected to be a challenging month for dealerships selling EVs. The expiration of the $7,500 federal tax credit, paired with differing strategies among automakers, introduced new complexity into the market just as September's surge in sales ahead of the tax credit deadline left dealer lots leaner than usual. By the start of October, available EV inventory was roughly half of midyear levels.

With fewer incentives to promote leasing or dealership-backed financing, more shoppers turned to alternative payment options. Edmunds data shows that cash and outside-financed purchases accounted for 23.2% of EV transactions in October, up from 12% of EV transactions in September. This shift underscores how evolving incentive structures and affordability pressures are reshaping buyer behavior.

Despite it all, shopper interest in EVs holds steady 

Even as affordability tightens and incentives dwindle, consumer interest in EVs hasn’t vanished. Edmunds site data shows EV consideration dipped from 12.7% in early September to 9.0% in mid-October, a modest decline that reflects normalization more than a total collapse.

Many buyers are likely taking a more deliberate approach — weighing ownership costs, charging availability, and model variety now that the price advantage created by leasing incentives has faded. While long-term interest in EVs remains, it may be more exploratory rather than indicative of immediate sales. Market activity in October has been shaped as much by short-term boosts from Tesla's recent lower-cost models as by steady, organic demand.

*Consideration is defined as research activity on Edmunds.com that occurs on a make/model/model year level, i.e., engaging with photos or reading Edmunds expert reviews on a model year page, looking at inventory listings, or submitting a lead to a dealer.

Edmunds says

The coming months will serve as an important proving ground for the EV market as it adapts to life without the $7,500 federal credit. Automakers are already adjusting strategies: Some are extending lease programs or trimming MSRPs, while others are introducing certified pre-owned EV programs and other offerings designed to make electric ownership more attainable.

For dealers, this transition presents an opportunity to reinforce value beyond the incentive itself by helping shoppers understand total cost of ownership, emphasizing charging education, and highlighting EV models with more attainable price points and range confidence.

But for now, this moment doesn't signal the end of EV enthusiasm — it marks the beginning of a more grounded, sustainable market that has a greater emphasis on product virtues over low monthly payments. The "reset era" will reveal which brands and retailers can make EV ownership feel not just aspirational but practical and within reach for the next wave of buyers.

¹_{Edmunds EV lease penetration data refers to fully electric vehicles only and includes dealership transactions only; excludes direct-to-consumer brands.}