Let’s not start 2026 trying to decipher the exact trajectories of various vehicle powertrains. The reality is that the U.S. automotive industry will need to contend with a mixed-powertrain future for quite some time. Therefore, a better approach may be to take a step back and enter the new year looking at the industry in a broader context.
First and foremost, we should expect suppressed overall volumes as affordability dominates consumer conversations. Average vehicle transaction prices are approaching $50,000, which would have purchased a nicely trimmed luxury vehicle only a few years ago. As a result, consumers are holding on to vehicles longer and are gravitating toward used cars.
Tariffs and the loss of electric vehicle subsidies will only add to cost pressures. As EV transaction prices rise significantly over the price of an internal combustion engine vehicle, the EV customer pool will mainly shrink to those with the financial means to support a strong commitment.
