U.S. New Car Sales Decline as EV Share Drops and Hybrids Rise

February 2026 data from J.D. Power and GlobalData show U.S. new car sales down 3.8%, EV share at 6.6%, as prices and loan terms rise. Read full analysis.

February is unfolding in a softer tone for the U.S. auto market. According to a forecast by J.D. Power and GlobalData, new vehicle sales are projected to reach 1.183 million units, down 3.8% from a year earlier. Retail sales are expected at 931,400 vehicles, marking a 4.6% decline. The slowdown is moderate, yet significant enough to signal a shift in consumer momentum.

The most striking change lies in the market mix. Electric vehicles now account for 6.6% of retail sales, down 1.8 percentage points year over year. For context, data from the International Energy Agency show that EVs represented more than 10% of U.S. sales in 2024, although growth had already begun to moderate. In contrast, hybrids continue to gain ground, reaching 13.5% of retail sales, while plug-in hybrids slipped to 1.1%.

Analysts note that the shift coincides with adjustments to federal EV tax incentives. Several reports indicate that after portions of the federal credits expired, EV demand in the United States weakened. Automakers are still leaning heavily on incentives to support sales: average manufacturer incentives stand at $3,293 overall, but climb to $10,356 for electric vehicles, even though that figure is lower than a year ago.

Prices, meanwhile, continue to edge higher. The average retail transaction price has risen to $46,303, up 2.7% year over year. EVs average $46,528, compared with $46,097 for non-EV models — a relatively narrow gap. Financing terms, however, are playing an increasingly central role in purchase decisions.

The average monthly payment has climbed to $811, and nearly 13% of buyers are opting for loans lasting 84 months or longer. Stretching loan terms helps offset high sticker prices, but increases overall borrowing costs. At the same time, the share of trade-ins carrying negative equity has risen to 31.5%, according to J.D. Power data.

Vehicles are also spending more time on dealer lots. The average days to turn stands at 59, while the share of vehicles sold within 10 days has fallen to 26%, another sign of cooling momentum.

In a global context, the U.S. market appears more restrained than some European peers. In Germany, fully electric vehicles accounted for roughly 22% of registrations in January 2026, while China continues to post high volumes of new energy vehicle sales despite a seasonal dip at the start of the year.

Taken together, February’s data suggest a market in transition. Hybrids are strengthening their foothold, EV growth has lost some momentum amid shifting incentives and pricing realities, and consumers are becoming more cautious. The numbers do not point to a dramatic reversal, but they underscore a move from rapid expansion toward a more measured phase for the U.S. auto industry.