In January, the growth of the U.S. battery electric vehicle (BEV) market outpaced that of the overall light vehicle market. However, clear signs indicate that the sales growth of BEVs in the U.S. is slowing down.
Last December, BEV registrations surged by 25% as consumers rushed to take advantage of the $7,500 tax credit before it was revoked by the Trump administration. By January, the urgency had subsided.
According to data from S&P Global Mobility, U.S. BEV registrations in January increased by 14% year-over-year to 102,188 units. In comparison, total light vehicle registrations in the U.S. grew by 4.5% to over 1.2 million units.
S&P Global Mobility analyst Tom Libby noted a warning sign in the January data: BEV market share grew modestly, rising by 0.7 percentage points from a year earlier to 8.3%. Libby stated, "There is growth, but it's not substantial. This is different from the trend seen in 2021, 2022, and 2023." During those years, BEV market share increased by more than 2 percentage points annually. However, since 2024, the growth rate has slowed and is expected to continue this trend into 2025.
Tesla Faces Challenges
Another warning sign is the decline in Tesla's registrations. Data shows that Tesla's U.S. registrations dropped by 11% in January to 43,411 units. Model Y, Model S, and Model X all saw double-digit declines.
Tesla's Model Y, the best-selling BEV in the U.S., had its registrations fall 26% year-over-year to 23,898 units. Meanwhile, Model 3 compact sedan registrations grew 19% to 14,004 units. Model X registrations dropped 45% to 1,813 units, and Model S registrations fell 38% to 889 units. Tesla's highly anticipated Cybertruck pickup also saw underwhelming performance, with only 2,807 registrations.
Despite these declines, Tesla retained its leading position in the U.S. BEV market with a 42.5% share, though this was a 12-percentage-point drop from a year earlier.
Analysts attribute Tesla's lower registrations in January to a shift in factory production towards the updated Model Y crossover. Additionally, Tesla is facing consumer backlash due to CEO Elon Musk's political statements and advisory role in the Trump administration.
Libby believes Tesla needs new products beyond the Cybertruck and a full redesign of its vehicle lineup rather than mere updates. Tesla has promised a new low-cost model in the first half of this year but has yet to reveal details.
On March 11, Gene Munster, a managing partner at Deepwater Asset Management, stated, "I think the controversy surrounding Musk and Tesla will last for at least a year. Once Musk steps away from the U.S. government (expected next year), the brand damage should ease. Negative press will fade, and Tesla's brand will recover because its EVs still offer the best value."
Wedbush analyst Dan Ives, who remains bullish on Tesla stock, warned that global anti-Tesla protests and Musk's political involvement could become major distractions for the CEO. In a March 11 research note, Ives wrote, "If Musk remains 110% focused on DOGE (Department of Government Efficiency) and neglects Tesla during this turbulent period, the brand damage will worsen." However, Ives remains optimistic about Tesla's long-term leadership and innovation in the EV space.
Amid Tesla's sales decline and partial consumer boycott, Trump purchased a red Tesla Model S, priced at $81,380 (including destination fees). Speaking alongside Musk at a White House event, Trump stated, "They are hurting a great American company" and hinted that any violent actions against Tesla would be labeled as domestic terrorism.
On March 11, Musk announced that Tesla plans to expand vehicle production in the short term. "To support President Trump's policies and demonstrate our confidence in America's future, Tesla is committed to doubling its U.S. vehicle production within two years!"
Detroit Brands Follow Suit
In January, non-Tesla BEV registrations in the U.S. totaled 58,777, with several automakers posting double- and triple-digit percentage growth.
Ford was the second-largest BEV brand in terms of registrations, with 8,366 units in January. The Mustang Mach-E crossover ranked as the third most popular BEV in the U.S., trailing only Tesla's Model Y and Model 3.
Chevrolet ranked third with 5,935 registrations. According to S&P Global Mobility, the Equinox EV crossover, which was not available in January last year, became Chevrolet's best-selling BEV in January, followed by the Blazer EV and Silverado EV pickup.
At the automotive group level, General Motors ranked second after Tesla with 10,642 registrations, followed by Ford and Hyundai Motor Group.
Korean Brands and Rivian Decline
After years of growth and extensive EV investments, Hyundai Motor Group saw its U.S. BEV registrations fall 4.8% year-over-year to 7,866 units in January. Hyundai and Kia registered declines of 5.3% and 6.9%, respectively, while luxury brand Genesis saw a 21% increase.
Rivian also saw a slight decline, with BEV registrations falling 2% to 2,995 units in January. The R1S crossover's registrations dropped 34%, while the R1T pickup fell 29%.
Mixed Performance for German Brands
In January, Volkswagen surged to the fourth spot among BEV brands in the U.S., with ID.4 crossover registrations reaching 4,329 units. The recently launched ID. Buzz registered 490 units.
BMW's U.S. BEV registrations increased by 4.3% to 3,718 units, ranking seventh among BEV brands. Registrations for the i4 and i5 sedans increased, while those for the iX crossover and i7 sedan declined.
Mercedes-Benz, which ranked in the top ten for U.S. BEV registrations in 2024, fell to 11th place in January as registrations dropped 29% to 2,361 units.
Hybrid Registrations on the Rise
Libby pointed out that while BEV sales growth is slowing, hybrid vehicle market share is increasing, attracting consumers not yet ready for full EVs. In the current economic climate, hybrids appear to be a more favorable choice.
According to S&P Global Mobility's registration data, hybrid vehicle (including plug-in hybrid) registrations in January outpaced BEVs, with market share rising 2.6 percentage points year-over-year to 13.7%. In contrast, gasoline vehicles (excluding hybrids) saw their market share in the U.S. light vehicle market decline to 74.3%, down from 76.4% a year ago.
Libby concluded, "There are many factors affecting BEVs, but one of them is undoubtedly the widespread adoption of hybrids. As more models enter the market, hybrid market share will only continue to grow."
