- - What’s next for EVs after a year of unraveling

Hamza ShabanDecember 20, 2025 at 7:00 PM

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One major thing changed the game for the American EV market this year: the elimination of the $7,500 EV tax credit.

In an instant, EVs became much more expensive, and a key incentive for consumers and automakers to accelerate the EV transition vanished.

In the place of an electrified future, pushed further away, a more incremental, hybrid present is taking shape.

Even before the EV policy shift, consumer demand had waned. Concerns lingered over the turn away from gas-powered cars. Higher costs were a factor, but so was unresolved anxiety over a perceived scarcity of charging stations and battery range. And a strain of American machismo — think of the most over-the-top Super Bowl ad aesthetic — continues to reject the technology as something prissy and foreign.

Automakers have struggled with the EV transition, and ambitious, revamped lineups have been curtailed.

The latest sign came earlier this month, when Ford announced it would abandon plans for several EV models and instead pivot to hybrid and extended-range vehicles. Ford said it would take $19.5 billion in charges related to the EV revamp.

The European Union is also expected to advance a measure to delay its 2035 ban on sales of internal combustion cars, ceding to national governments and automakers who have pushed for more flexibility.

That automakers have pulled back on their EV ambitions marks a major detour for the industry.

But the rough going offers clues of what 2026 and the next phase of the EV roadmap will look like: A focus on hybrids, lower cost models, and pressure from international markets will help shape the market.

Ford, for instance, is ending production of its Lightning, the EV variant of the F-150 pickup truck. Taking its place will be a compromise, an extended-range version that uses a gas engine as a generator.

Crucially, the carmaker is sticking with plans to release a low-cost EV pickup by 2027. That's a sign that carmakers believe affordability and product fit can still make EVs work... just not yet.

Ford will stop making its F-150 Lighting EV as part of a shift away from its electrified ambitions. (Photo by Scott Olson/Getty Images) (Scott Olson via Getty Images)

Toyota, which was until recently seen as late to the EV space, has embraced the hybrid lineup (where it was first mover with the Prius) as a kind of stepping stone, positioning itself within the sweet spot of consumer preference — eager for better gas mileage, but not quite ready for an EV.

Policy changes and competition from low-cost Chinese models do complicate things for the US market. What is considered a broad retreat from pure EVs in America could expose automakers here to the eventual adoption of Chinese and European EVs — which will have the advantage of years of development and consumer feedback.

The 2026 Toyota Prius hybrid electric vehicle (HEV) is showcased at the LA Auto Show in Los Angeles Thursday, Nov. 20, 2025. (AP Photo/Damian Dovarganes) ()

In some ways, the market energy that was once buzzing around EVs has migrated to another transportation disruptor: robotaxis.

Elon Musk's Tesla (TSLA) is slated to begin production of its autonomous Cybercab next year, in what its most bullish backers say could add another trillion dollars to its market cap.

Alphabet's (GOOG, GOOGL) Waymo, seeking to raise money at a valuation of at least $100 billion, has thousands of commercial robotaxis operating in the US. And Uber, through more than a dozen partnerships, has plans to provide robotaxis in at least 10 markets by the end of next year.

This isn't exactly the all-electric future that its most bullish proponents had envisioned. But in 2026, a hybrid approach is the recalibration the industry is banking on.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.

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