New tariffs, the loss of key subsidies and other factors sent Colorado electric vehicle and plug-in hybrid sales off a cliff in the first quarter of the year, with new EV registrations plummeting 64% and dragging down the overall state car market by nearly 20% compared with early 2025.
The drop was so steep that consultants for the Colorado Auto Dealers Association predict overall car and light truck sales will drop 5.3% for 2026, a distinct slump in an influential element of the economy. Colorado’s new car registrations in the first three months of 2026 fell further than any of the 24 states studied.
Severely deflating the once-promising clean car market in Colorado was the Sept. 30 loss of a $7,500 federal tax credit. Colorado’s state EV subsidy also declined, to $750 from $2,500, on Jan. 1.
Meanwhile, interest rates for new car loans have stayed stubbornly high, and new features and company price increases have pushed the average sale into the $50,000 range at a time when job uncertainty is rising.
A $1 a gallon spike in fuel prices since the start of the Iran war in March has also cut into consumer spending.
Overall new car sales in Colorado dropped 18.4% in the first quarter, compared to an 8.5% drop nationwide.
“I know we tend to focus on EV numbers here, but the year-over-year 18% drop in the full market is cause for concern,” auto association chief Matthew Groves said.
Still, the drop in clean car sales stood out in contrast to Colorado’s target of getting more than 900,000 zero-emissions cars on the road by 2030.
Combined sales of battery electric and plug-in hybrid vehicles, together considered zero emissions, reached only 11% of the overall car market in the first three months, compared with a 26% share of new sales in the comparable period of 2025. The fall was a continuation of trends from the final quarter of 2025 after the federal subsidies expired, when 15% of Colorado car sales were from electric and plug-in hybrids.
“Unforeseen events like fluctuating tariff rates, the phaseout of battery electric vehicle tax credits, the war in Iran, and rising gasoline prices have all thrown uncertainty into the outlook,” the consultant’s analysis said. “Largely as a result of this ongoing tumult, consumer confidence has plummeted to near record-low levels. Heightened uncertainty makes people reluctant to make big-ticket purchases, like automobiles.”
Type of Story: News
Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.