Changing mix of EVs, hybrids, and conventional cars requires different supply-chain planning

Despite the end of U.S. incentives, EV interest persists 

After U.S. tax credits for electric vehicles (EV) ended in September 2025, growth slowed but consumers have not turned away from electric vehicles altogether. 

Behind the electric vehicle trend

• When EV incentives ended, the market responded quickly. EV loyalty declined sharply in the United States, while movement from EVs to gasoline-powered cars increased. Between December 2025 and February 2026 that trend moderated. 
• EV sales themselves experienced a similar reset. Sales in the second quarter of 2026 were an estimated 20.5% below the same period in 2025. 
• But consumer interest in EVs remains. J.D. Power found that 60% of U.S. new-vehicle shoppers in 2026 were very or somewhat likely to consider an EV, compared with 59% in 2025. 

Meanwhile, long-standing barriers such as price, charging availability, and range anxiety are gradually improving. Future EV demand may therefore depend increasingly on how quickly affordability, infrastructure, and range continue to improve. 

Consumers are moving fluidly between gas and electric 

While EV owners in the United States are increasingly moving back to conventional vehicles when they’re in the market, the shift is more nuanced than a straightforward move away from electric. 

By the numbers

• Through June 2026, 52,154 EV households acquired a gasoline vehicle, up 15.9% from the same period a year earlier. Among non-Tesla EV households, the share choosing gasoline rose from 38.9% to 44.4%. 
• At the same time, EV loyalty remains relatively high. Experian found that in the second quarter of this year, 72.2% of EV owners purchased another EV, while 18.5% switched to gasoline.
• Owner satisfaction also remains strong. In February 2026, J.D. Power reported that 96% of EV owners said they’d consider another EV in the future. 

What it says about powertrain trends

The data suggests increased fluidity in powertrain choices. Rather than broadly rejecting EVs, some EV owners are returning to gasoline, but most remain electric. Other consumers are increasingly considering alternatives such as hybrids. 

In a shifting market, hybrid vehicles are on the rise 

The shift in power train preferences is particularly visible in the hybrid market. Despite government policy, hybrids are driving a modest increase in (partially) electrified vehicles. In response, carmakers are increasing hybrid offerings.  

What the numbers say

• In the second quarter of 2026, hybrids reached a record 16% of U.S. light-duty vehicle sales.
• Because of hybrid growth, the combined share of fully and partially electric vehicles increased from 22% to 24%.
• That momentum is also showing up against a softer overall vehicle market. Hybrid sales increased roughly 9% during the first half of 2026, even as total U.S. new-vehicle sales declined 2.2%.  

Automakers are responding by expanding hybrid availability across high-volume models. Toyota has moved the Camry exclusively to hybrid power and eliminated the conventional gasoline powertrain from the 2026 RAV4 lineup. Among Honda’s core models, hybrids now account for more than half of Accord and CR-V sales and represent a growing share of the Civic mix. 

Toward a multi-powertrain ecosystem

Reality on the ground upends market expectations from a few years ago. Rather than a linear transition from ICE to EV, multiple powertrains now coexist in the same environment. For carmakers, that means supporting gasoline, hybrid, and EV component ecosystems simultaneously, instead of preparing for one technology to simply replace another. 

EV market share still growing—but slowly

Even after the post-incentive adjustment, the broader EV market continues to develop. Price, used availability, and wider charging availability help explain why EV remains part of that fluid mix. 

• EVs accounted for 6% of U.S. light-duty vehicle sales in the second quarter of this year, down from 7% a year earlier. But net numbers continue to grow. The Alliance for Automotive Innovation reports that 7.5 million EVs are now on U.S. roads, up from 7.3 million at the end of 2025. 
• Meanwhile, the secondary market is developing. Experian reports more than 1 million new and more than 540,000 used-EV registrations over the last twelve months.
• EV research company Recurrent found that used EV prices increased 5.1% from January through June, with the strongest gains concentrated among vehicles priced below $40,000. Some popular used EVs were selling in roughly two weeks. 

Bottom line: The EV market is becoming broader than new-vehicle sales alone. Greater used-vehicle availability and improving affordability are creating more entry points for consumers at different price levels.

What automotive shippers should know right now

EVs appear to be settling into a more durable role within an increasingly fluid powertrain market. ICE remains dominant, hybrids are gaining share, and EV growth has moderated, but the electric market continues to mature.

The result is an environment in which consumers have more viable choices, while automakers and suppliers need to support several powertrain strategies at once. 

• Production mix matters more than headline EV share. A shift among gasoline, hybrid, and electric vehicles can change component demand even when total vehicle production is relatively stable. Beyond national sales trends, shippers should monitor production plans at the model and plant level. 
• A more mixed powertrain market can increase both network and inventory complexity. Hybrids retain many traditional engine and transmission components while adding batteries, motors, and power electronics. EVs rely on a different component mix.
• Supporting all three powertrains can keep more suppliers, SKUs, and transportation lanes active at once, making it more important to understand which parts and suppliers are most exposed to shifts in the model mix. 
• In an evolving market, plan for multiple demand scenarios rather than one transition path. Shippers should stress-test sourcing and transportation plans against different powertrain mixes, so they can adjust without redesigning the network each time demand shifts. 

Tariff updates

Canadian trade tensions affect automotive supply chains

Trade tensions between the U.S. and Canada rose further as both parties imposed new tariffs on each other and the U.S. banned $1 billion worth of Canadian imports starting in late September.

While this latest escalation affects only a limited share of Canadian exports, the threat of 50% U.S. tariffs on Canadian automobiles, auto parts, and steel beginning January 1, 2027, has raised concerns across the sector.

Automakers and suppliers are evaluating potential cost increases, sourcing changes, and production impacts as vehicles and components often cross the border multiple times during the manufacturing process.

With trade negotiations between the two countries suspended but the automotive tariffs not scheduled to take effect until next year, companies may delay major supply chain decisions while monitoring whether the two countries can reach a new agreement.

Expanded Iran and Russia sanctions

The U.S. administration has expanded restrictions on trade with Iran and Russia. Shippers should be aware that interactions with foreign companies involved in Iran and Russia trade may present increased compliance risk.

For additional information on these developments, see the Trade Policy & Customs section of this report.

Table of Contents