Rising prices and strong EV demand reshape the U.S. automotive market ahead of federal tax credit expiration
On the Dash:
- New-vehicle prices rose in August, with the average transaction price (ATP) hitting $49,077, the highest annual gain in more than two years, while retail sales climbed 2.5% year over year.
- EV sales hit a record 146,332 units in August, capturing 9.9% of the market, but Tesla’s U.S. EV market share dropped to 38%, its lowest in the modern EV era.
- Incentives softened slightly for the overall market but remained more than twice as high for EVs, averaging over $9,000 per vehicle.
New vehicle prices increased in August as 2026 models reached dealerships and automakers raised prices to offset rising costs, according to Kelley Blue Book.
The average transaction price (ATP) for new vehicles hit $49,077, up 0.5% from July and 2.6% from a year earlier, marking the largest annual gain in more than two years. Retail sales climbed 2.5% year over year despite higher prices.
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The average manufacturer’s suggested retail price (MSRP) rose to $51,099, up 3.3% annually, the largest increase in 2025. Incentive spending softened slightly to 7.2% of ATP, remaining steady compared to last year. Of 31 major brands tracked, only five reported lower prices year over year, led by Acura (-6.5%) and Tesla (-5.5%), while seventeen brands posted gains exceeding 3%. Full-size pickups, including the Ford F-Series ($66,934), Chevrolet Silverado ($61,023), GMC Sierra ($70,150), and Ram ($65,849), contributed significantly to higher ATPs.
Additionally, EV sales surged to a record 146,332 units in August, representing 9.9% of the U.S. market, up from 9.1% in July. With government-supported EV tax credits set to expire at the end of September, third-quarter 2025 is on track to set an all-time EV sales record. The EV average transaction price rose to $57,245, up 3.1% from July but largely unchanged year over year. Incentives for EVs remained high at 16% of ATP, or over $9,000 per vehicle.
Despite the overall growth in EV sales, Tesla saw its U.S. market share slip to 38%, its lowest point in the modern EV era. Tesla’s ATP in August climbed 2.9% from July to $54,468 but remained down 5.5% from last year, and sales fell 6.7% year over year.
The data highlight a U.S. automotive market balancing rising production costs, evolving consumer preferences, and ongoing federal incentives for EV adoption. Full-size pickups and EVs continue to drive price increases, while competition and shifting incentives are reshaping the market landscape.
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