Is an EV Winter Coming?

Image: MetaAI

​Is an EV Winter Coming?
 
Electric vehicle tax incentives were terminated in the U.S. on Sept. 30, 2025. China’s tax exemption for EVs ended on Dec. 31, 2025, and a 5% purchase tax is being enforced in 2026 and 2027, increasing to 10% in 2028. Is an EV Winter approaching, or will strong consumer demand continue to drive sales?
 
Here are the topics we’ll cover in this blog. Email [email protected] if you’d like an updated Auto Stock Report Card.
 
Global EV Sales
U.S. EV Sales
Tesla
Price Wars
The Magnificent 7
 
Here is more information on each topic.
 
Global EV Sales
According to Electrek, global EV sales are expected to come in at over 18.5 million for 2025. That represents 23% sales growth (by unit) year over year. China is the biggest market, with 11.6 million EVs sold January through November, for 63% market share, followed by Europe (3.8 million), North America (1.7 million) and the rest of the world (1.5 million).
 

Source: Electrek.co.

EVs accounted for about 25% of vehicle sales in 2025. Meanwhile, ICE* vehicles are about 63% of the market, down from 78% just a few years ago. The consensus is that ICE vehicles are in a terminal decline.
 
*Internal Combustion Engine
 
U.S. EV Sales
Next year, partially due to a scaling back of the tax incentives in China and the end of the tax credits in the U.S., EV sales growth is expected to slow to 12% (source: Bloomberg New Energy Finance). The U.S. is expected to have a particularly difficult go of it in 2026, though longer term prospects for the transition out of ICE* and into EVs should spark again in 2027 and 2028.
 
The problem with just hanging on for that outcome is that we have seen a great deal of volatility, particularly when the share price is very expensive. Tesla’s 52-week low is $215/share, compared to $431.41 on Jan. 7, 2026. There is no guarantee that the recovery is swift when that kind of plunge occurs.
 
​Despite the industry move to electric, Ford Motor Company is taking a $19.5 billion impairment charge (most in 2025) and will have a new focus on hybrids and using its batteries to power data centers. According to Ford’s press release on Dec. 15, 2025, “Ford plans to begin shipping BESS [Battery Energy Storage] systems in 2027 with 20 GWh of annual capacity.” Ford’s retreat from EVs has a lot to do with the cash negative trajectory that most EVs go through in the early stages. Ford’s debt load restrains the company from losing money on a new venture, like the startups have been able to do. Borrowing to build factories is different than borrowing to pay off debt, pensions and OPEB (Other Post Employment Benefit) costs. S&P Global has Ford Motor Company at the lowest rung of investment grade (BBB-) with a negative outlook. The shift in direction likely has everything to do with Ford trying to keep investment grade status, as a downgrade puts it back in junk bond territory. ​
 

Ford expects 2025 adjusted EBIT to be $7 billion, which is -31.4% lower than 2024’s $10.2 billion. The company will release their 4Q and full year earnings report on February 10, 2026, at 4:05 pm ET.
 
Tesla
Tesla’s deliveries were down -15.6% year over year in the 4th quarter, from 495,570 in 2024 to 418,227 in 2025. Annual sales were down as well, with 1,636,129 vehicles delivered in 2025, compared to 1,789,226 in 2024. This largely has to do with the elimination of the tax credit in the U.S. and intense competition in China.  
 
Price Wars
As I warned repeatedly in 2025, Tesla’s net income in 2025 is likely to come in at less than $5 billion. The heyday for the company was 2023, with a net profit of $15 billion. 2024’s profit was less than half of that, at $7.13 billion.
 
There are hundreds of electric vehicles available, particularly in China, the world’s largest EV market. While Tesla has been a beloved brand worldwide for over a decade, the cars are more expensive than the Chinese competitors. Tesla has lowered prices to compete (thus the lower net profit) but is still losing market share. China’s BYD was the top BEV seller in 2025, with 2.26 million units sold over Tesla’s 1.64 million. BYD’s more affordable EVs were also more popular in the U.K. and Germany than Tesla in 2025.
 
The Magnificent 7
The trillion-dollar companies that are leading the gains on Wall Street have been responsible for outsized investor wins and losses over the last few years. When stocks are on fire, Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla are the sparks. When prices plunge, they are the culprits, as you can see in the chart below showing 2022 performance. In April of 2025, investors could have purchased Nvidia for under $95/share.
 

Why the wild rides? Investors are intoxicated with AI and EVs and then sober up whenever there is a fly in the drink. April was the Tariff Scare. In 2022, there were two quarters of negative GDP growth (though no official recession was declared). It’s not that AI or EVs are going out of style. It’s that the share prices are too expensive and there is a worry about cash burn. You might have heard the term "AI Bubble" being used a lot by pundits.  
 
While Tesla could be worth trillions by 2030. In 2026, it was a company that earned less than $5 billion. Should a company with $5 billion in net profits be worth $1.43 trillion?
 
When stocks get too expensive, the correction tends to be swift and severe. We saw this in the Dot Com Recession and in the Great Recession with overvalued real estate.
 
Bottom Line
EVs (and AI) are here to stay. However, the road from here to full adoption will likely include twists and turns, which could prompt wild gyrations in share prices, as we’ve seen over the past few years. While the general trend has been up, it is also true that the economy hasn’t seen a recession. Recessions can drag down even great companies. Having said that, no recession is predicted for 2026. Most economists believe that the economy will be modestly stronger this year – 2.3-2.8% GDP growth – thanks to AI and data centers. (Economists are terrible at picking recessions.)
 
Our best protection is to have a diversified wealth plan and capture gains when share prices soar. With stocks at an all-time high as I write this blog, now is a great time to make sure that we have an age-appropriate, diversified wealth plan that includes hot industries, including AI and EVs, while also protecting our principal from losses in the event of a correction. (Our hots include silver and Peru, which soared in 2025, with far superior performance to EVs, AI and the Magnificent 7.)
 
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Natalie Wynne Pace is an Advocate for Sustainability Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Answers Check out Natalie Pace's Substack podcast on Apple and Spotify.
Watch videoconferences and webinars on Youtube.

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Check out Natalie Pace's Substack podcast on Apple and Spotify.
Watch videoconferences and webinars on Youtube.

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.