An anti-EV narrative is emerging around battery electric vehicles in the U.S.: “the market is slowing” and “the EV tipping point is years away and may never arrive.”
Like many narratives, there’s an element of truth. EV sales aren’t increasing as quickly as a few years ago. And there are headwinds with the removal of some federal incentives that were pushing EV sales and charging infrastructure. But this misses a larger point we see in the McKinsey Center for Future Mobility’s annual Consumer Pulse survey. There is a lot of strength in the EV market, especially if you include transition vehicles like plug-in hybrids and extended-range EVs (EREVs).
What do the sales say? In the first quarter of 2025, automakers sold 374,841 electric vehicles in the U.S., including battery-electric vehicles (BEVs), plug-in hybrid (PHEV), and fuel-cell electric vehicles. That was 9.6 percent of the overall light-vehicle market. The two quarters before that, EV sales eclipsed 10 percent of the market. Year over year, EV sales increased by 9 percent, compared with a 5.6 percent for overall car sales.
This was a slower increase than the last few years, to be sure. In 2021, the EV market nearly doubled. In 2022 and 2023, it grew by 62 percent and 35 percent. On the other hand, just five years ago, EV market share was 2 percent. Now it’s 10 percent.
There are headwinds. U.S. automakers continue to struggle with making EVs profitable. Consumer EV subsidies will end Sept. 30. In the short term, we’re seeing a bump in sales as consumers who were on the fence rush to buy before the deadline. Over the longer term, there is going to be far less government support and funding for public infrastructure. That’s a challenge, but it also may make it more straightforward for private investors. Improving availability and reliability of public chargers will be up to them alone.
Yet, even with the US slowdown, the International Energy Agency predicts EVs will account for 40 percent of global auto sales by 2040, versus 20 percent in 2024. As longtime auto journalist Mike Colias says in his new book, “InEVitable: Inside the Messy, Unstoppable Transition to Electric Vehicles,” the forces pushing legacy automakers toward electrification – Tesla and the Chinese – aren’t letting up.
“As messy as the EV story is today, automakers can’t afford to rip up their EV strategies,” Colias says.
Perhaps the biggest determinant if EV momentum will see a resurgence is the availability of much more affordable EVs (like we see e.g., in China). Given the still high battery cost this is difficult, and with the subsidies going away that challenge just got bigger.
An important question is what’s next? Will the electric vehicle market forever be a niche, or is slowing sales growth a mere bump in the road?
According to our models, the U.S. policy changes will slow down rather than stop the shift to electric vehicles. We think the adoption curve could be pushed out by five years or more. Recent regulatory changes also give U.S. automakers more time to get EVs profitable and more powertrain flexibility to focus on hybrids, plug-in hybrids, and extended-range EVs. They will need to be adaptable, and they will need to spread capital investments across multiple electrified powertrains with flexible platforms.
The McKinsey Consumer Pulse survey, which hails from our Center for Future Mobility, has some other important information for the industry trying to adapt to the new landscape. We have been polling consumers going back to 2016 to measure how attitudes are changing each year. This year’s survey included about 26,000 car owners around the world. What we’re seeing should give confidence to those who are rooting for more electrification.
First, there’s not a lot of backsliding among people who actually own BEVs. More than three-fourths of BEV owners say their next car will be battery-electric. Of the 24 percent who say they’ll switch, 5 of 8 say they’ll go with a plug-in hybrid, not gasoline. Only 1 percent say they’ll never go back to electric.
Second, while the growth of the overall EV market is slowing in the U.S., results vary widely by region. In California, Washington and Oregon – states where there have been major investments in infrastructure – EV adoption rates are on par with Europe. Other states on the East and West Coasts are seeing much more rapid EV adoption. For example, 19 percent of Maryland vehicle owners say their next car will be a BEV, even though the electric-vehicle market share is just north of 12 percent today.
By contrast, there are some states with a larger rural population mix where fewer than 4 percent of consumers say their next vehicle will run on batteries alone. This underscores the huge difference between urban, suburban, and rural consumers. Overall in U.S. urban areas, 51 percent say their next vehicle will be BEV or PHEV. In rural areas, it’s 18 percent.
A third differentiator is age. The younger the consumers, the more likely they will shift to electric soon. For Gen Z, 47 percent say they’ll buy a BEV or PHEV next. For Millennials, it’s 45 percent. It drops to 22 percent for Generation X and 21 percent for the Baby Boomers.
The most important finding may be the role that PHEVs are playing in the electric transition. Because of their smaller battery packs, they’re cheaper than BEVs. And since they run on gasoline when their EV-only miles are used up, there’s no range anxiety. But this taste of battery power acts like a gateway drug. Once they realize battery power can meet most of their needs, they keep going. Households that were holding onto a second, gasoline-powered car are ready to give it up for their next vehicle.
Another class of vehicle that may serve as a bridge is known as an extended-range EV, or EREV. These are similar to PHEVs, but instead of having an engine that can put the vehicle in motion, an EREV’s gas engine serves only as a generator to charge the battery pack. EREVs like the Ramcharger are coming to the U.S., with more electric-only range and total driving range than a typical PHEV. In China, where they’re more common, twice as many consumers say their next vehicle will be an EREV than say they’ll buy a conventional gas-powered vehicle.
The biggest determinant of EV sales over the long term will depend on the availability of much more affordable electric vehicles, the kind that are available in China today. For now, U.S. automakers will breathe a sigh of relief, gaining several years, and at least one product cycle more, to make EVs more profitable. They also know there is increasing risk of falling further behind Chinese OEMs who now sell more than 50 percent ‘new energy vehicles’ domestically and are building massive capacity for global EV exports with high tech content per vehicle at affordable prices.
What’s the bottom line? The full picture isn’t one of a stagnant U.S. market. It’s one of a market that is changing in significant ways. Key states and regions are already at the tipping point for EVs while others will continue to be slow to adopt. Important demographics like urban and young consumers are going electric. If PHEVs and EREVs become more common, that taste of electrification may accelerate changing attitudes and expectations.
Beyond the market slowdown and the removal of incentives, we can see signs of continued movement toward hybridization and electrification. It confirms what we have long known: consumers still have plenty of voice in the market’s actions.
Philipp Kampshoff is a senior partner and global co-leader of McKinsey’s Automotive & Assembly practice, based in Houston, and Patrick Hertzke is a partner and co-leader of McKinsey’s Center for Future Mobility, based in Boston.
There was a time when environmental leadership in the auto industry was a scarce commodity. Seventeen years ago, when Green Car Journal announced its first Green Car of the Year® in Los Angeles, it was difficult to identify more than a few dozen truly worthy vehicles to be considered for the honor. Today it is a formidable challenge in a different way. Now, analyzing the expansive field of green cars that champion greater environmental performance can be downright mind numbing, along with the process of honing the list down to a manageable number of candidates for each of our Green Car Awards™.
Still, this is a great problem to have and we’re up to the challenge. In fact, we celebrate the difficult and time-consuming process. This sheer number of greener models means that all of us benefit from the ability to buy and drive an increasing number of vehicles that champion a lighter impact on the environment.
As finalists are evaluated during the judging process, Green Car Journal weighs an array of important criteria such as environmental achievement, cost, value, safety, performance, functionality, and availability. These may vary from one award category to another. For instance, cost is less of a factor in Luxury Green Car of the Year™; greater driving range may not be as critical in Urban Green Car of the Year™; and immediate availability is less of an issue for Commercial Green Car of the Year™, since commercial fleets tend to plan well ahead and are used to scheduled batch builds of specialized vehicles. Some criteria take on more importance, such as electric driving range in most categories where EVs are considered; family friendliness in awards where passenger needs or capacity are important; and tow ratings and realistic long-distance towing and hauling capabilities in the case of Green Truck of the Year™.
There are more complex issues at play today. We’ve seen order banks for some new or popular pickups like the Ford F-150 Lightning and Ford Maverick suddenly close for the model year, which means consumers are no longer able to order one, at least at this time. Since price is an important consideration for most award categories, when we see sudden price hikes in the thousands of dollars, we also take notice. Then there’s the issue of supply chain disruptions and materials shortages that can delay a model’s expected availability. We take all of this into account and dive deep to ensure we’re as up to speed as possible to avoid potential surprises.
Green Car Journal’s Green Car Awards™ program has evolved over the years, most notably with the addition of more award categories to reflect the ever changing and expanding world of environmentally positive vehicles. Plus, along with the ‘greenest’ vehicles honored by the 2023 Green Car Awards™ program, Green Car Journal now recognizes the crucial roles that infrastructure and technology play in enabling a more sustainable driving future.
Let's get to it. Here are the winners of Green Car Journal’s prestigious 2023 Green Car Awards™:
TOYOTA CROWN – The Crown is Toyota's sophisticated new flagship that champions high fuel economy, lower carbon emissions, and appealing style. The five-passenger sedan features a stylish and high tech cabin designed to offer a premium feel. It’s powered by a 2.5-liter THS hybrid estimated to deliver 38 combined mpg, or a more powerful 2.4-liter turbocharged HYBRID MAX powerplant with 340 horsepower. On-demand all-wheel drive is standard.
Finalists for Green Car Journal’s legacy award included the Chevrolet Bolt EUV, Nissan Ariya, Toyota bZ4X, Toyota Crown, and Volkswagen ID.4.
CADILLAC LYRIQ – Featuring upscale styling and a premium theme, the Lyriq is Cadillac’s first all-electric vehicle that’s offered in single or dual motor versions with rear- or all-wheel drive. At a base price of $62,990, the Lyriq features an impressive 312 mile driving range. Satisfying performance is delivered by 340 horsepower in the single motor variant and 500 horsepower in the dual motor version.
Among this award’s finalists were the Cadillac Lyriq, Genesis GV60, Lexus RX, Mercedes-Benz EQB, and Polestar 2.
MITSUBISHI OUTLANDER PHEV – Last year’s introduction of the all-new Mitsubishi Outlander made waves with its more dynamic styling and upscale features. Now the next-generation Outlander PHEV has joined the lineup. Featuring standard all-wheel drive, the twin motor plug-in hybrid SUV now features significantly greater battery electric range of 38 miles and 420 miles overall, plus the addition of three-row seating that was unavailable in the previous generation Outlander PHEV.
Finalists included the Kia Sportage, Mitsubishi Outlander PHEV, Toyota Corolla Cross Hybrid, Toyota Sienna, and Volvo XC40.
RAM 1500 –The RAM 1500 is a model of versatility and functionality that provides pickup buyers loads of choices. It’s available in Quad Cab and Crew Cab configurations, offers two pickup box lengths, two- or four-wheel drive, and diverse power options. These include two hybrids – a 3.6-liter eTorque V-6 and 5.7-liter eTorque HEMI V-8 – plus a 3.0-liter EcoDiesel and 6.2-liter supercharged V-8. RAM can carry payloads up to 2300 pounds tow trailers up to 12,750 pounds.
Finalists considered for this award were the Ford F-150 Lightning, Ford Maverick, Hyundai Santa Cruz, RAM 1500, and Toyota Tundra.
FISKER OCEAN – The all-electric Fisker Ocean SUV features an appealing and sporty design enhanced by an attractive and uncluttered high-tech interior. It’s available in three versions with a driving range of 250 to 350 miles. Beyond its zero-emission electric drive, Fisker is committed to making the Ocean a model of sustainability with over 110 pounds of recycled materials used in its construction, including crushed carbon fiber and plastics from bottles and fishing nets.
Finalists for this award were the Audi Q4 e-tron, Fisker Ocean, Honda CR-V, Kia EV6, and Subaru Solterra.
FORD F-150 LIGHTNING PRO – The F-150 Lightning PRO available to fleets offers 240 to 320 miles of all electric range, depending on battery pack, with a payload capacity up to 2235 pounds. Towing capability up to 10,000 pounds is ideal for urban and regional applications where long-distance towing is not required, since towing can significantly reduce electric range. It’s available with Pro Power Onboard outlets for power at job sites. A Special Services Vehicle variant is made for non-pursuit police department applications.
Finalists for the award were the Brightdrop EV600, Ford E-Transit, Ford F-150 Lightning PRO, Rivian Delivery Van, and Via Motors Chassis Cab.
MINI COOPER SE ELECTRIC – The fully electric MINI Cooper SE carries on the tradition of the MINI as a diminutive two-door hardtop with a fun-to-drive nature and go-kart handling, adding the important distinction of zero-emission operation. The Cooper SE Electric is an ideal vehicle for urban environments, offering a small physical footprint, easy maneuverability, and an electric driving range of 114 miles between charges.
Finalists included the BMW X1, Chevrolet Bolt, Kia Niro, MINI Cooper SE Electric, and Nissan Versa.
JEEP GRAND CHEROKEE 4XE – The Grand Cherokee 4xe offers all the outstanding features of Jeep’s conventional SUV with the addition of plug-in hybrid capability. It’s powered by a 2.0-liter turbocharged four cylinder engine and two electric motors delivering a total of 375 horsepower. This Trail Rated Jeep features 25 miles of zero-emission on- and off-road driving and a combined 470 miles of range, can tow up to 6,000 pounds, and ford up to 24 inches of water since all high-volt electronics are sealed and waterproof.
Vying for this award were the RAM 1500 eTorque, Ford F-150 Lightning, Jeep Grand Cherokee 4xe, Jeep Wrangler 4xe, and Rivian R1T.
FREEWIRE TECHNOLOGIES BOOST CHARGER – Freewire Technologies’ Boost Charger integrates lithium-ion battery storage to eliminate the need for expensive electrical service upgrades at gas stations adding EV fast charging. Phillips 66 has installed a Boost Charger at a station near its Houston headquarters and plans to leverage its network of 7,000 Phillips 66, Conoco, and 76 branded sites with additional Boost Chargers.
Finalists included Clean Energy Fuels RNG Stations, EVgo Autocharge+, Electrify America Megawatt Energy Storage, Freewire Boost Charger, and SparkCharge Roadie.
LI-CYCLE SPOKE & HUB TECHNOLOGIES – Li-Cycle’s Spoke & Hub system recycles end-of-life lithium-ion battery packs without requiring dismantling. Batteries undergo a submerged shredding process at regional Spoke facilities in the U.S., Canada, and Europe that produces no wastewater, with the output a black mass consisting of critical metals including lithium, cobalt, and nickel. A centralized Hub facility then processes the black mass and creates battery grade materials for reuse.
Finalists considered for this award were BMW eDrive Zones, ConnectDER, Ford Home Integration System, GM Hydrotec Fuel Cell Power Cubes, and Li-Cycle Lithium-Ion Battery Recycling.
Rising above a substantial field of ‘green’ competitors to become a Green Car Awards™ candidate is a noteworthy achievement in itself. To honor these vehicles, all finalists considered in a Green Car Awards™ category are recognized for their commendable environmental achievement with Green Car Journal’s 2023 Green Car Product of Excellence™.