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Blue Bird Corp
$51.6
As of today:Dec 16, 15:44:19 GMT-51.16%
$0.59
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## Executive Summary The U.S. electric vehicle market has entered a period of sharp contraction following the September 30 expiration of the federal EV tax credit. Data from November 2025 reveals a significant downturn in sales across the board, most notably for market leader **Tesla**. In response, foreign automakers are resorting to deep discounting to move inventory. This market reality stands in contrast to a bullish outlook for domestic manufacturers, which is predicated on a proposed new tax incentive designed to favor U.S.-assembled vehicles. ## The Event in Detail According to data from **Cox Automotive**, U.S. sales of new electric vehicles fell 40% in November 2025 compared to the previous year. **Tesla** reported a 23% year-over-year drop in its domestic sales, delivering approximately 39,800 units, its lowest monthly total since January 2022. This downturn is a direct consequence of the sales surge in the third quarter as consumers rushed to purchase vehicles before the federal tax credit expired. **Tesla's** attempt to mitigate the slump by introducing lower-priced, de-contented versions of its Model 3 and Model Y has proven insufficient. Furthermore, this strategy has reportedly led to the cannibalization of higher-margin models, placing significant pressure on the company's gross profits, which are projected to fall from a peak of $20 billion in 2022 to approximately $7 billion this year. ## Market Implications The market's high sensitivity to government subsidies is now clear. The absence of broad-based incentives has triggered immediate and aggressive strategic shifts among automakers. **Kia** dealers are offering discounts of up to $11,000 on EV6 models and as much as $17,000 in lease cash on the EV6 GT to stimulate demand. Similar declines were reported for other brands, with **Honda** and **Hyundai** also experiencing double-digit percentage drops in EV sales. The current environment puts companies like **Tesla** under considerable financial pressure, with the potential for a net loss in the fourth quarter. The focus now shifts to how automakers will navigate a market where consumer demand is tightly linked to affordability and government policy. ## Expert Commentary Despite the current market-wide slump, industry analysis highlights a positive future for domestic auto manufacturers. An analyst note states, "Affordable EVs and proposed tax incentives are expected to boost demand for domestic auto manufacturers." The proposed policy in question is a tax deduction of up to $10,000 on interest for vehicles assembled in the United States. This has specifically generated a bullish outlook for companies such as **General Motors (GM)**, **Polaris (PII)**, and **Blue Bird (BLBD)**, which are positioned to benefit directly from such a policy. ## Broader Context The situation reflects a potential pivot in U.S. industrial policy, moving from broad, technology-agnostic subsidies to more targeted, protectionist measures aimed at bolstering domestic manufacturing. This trend is occurring as the global EV landscape becomes more competitive. In Europe, **Citroën** is exploring the possibility of a sub-£15,000 electric car, contingent on the approval of a new 'E-car' category with eased regulatory standards. In the U.S., a consortium of eight automakers is working to develop a charging network to challenge **Tesla's** dominance, indicating a long-term strategic focus on building competitive infrastructure beyond immediate price adjustments.
## The Event in Detail Amid a complex regulatory landscape, the U.S. domestic auto industry is forecast to see continued growth, with projected sales reaching 16.1 to 16.2 million units in 2025, up from an estimated 15.98 million in 2024. This bullish forecast is supported by the introduction of more affordable Electric Vehicle (EV) models and proposed tax incentives designed to stimulate buyer demand. However, recent data indicates a nuanced market, with EV registrations experiencing a 14% year-over-year decline in October. The EV share of the light-vehicle market consequently fell to 6.9% from 7.6% during the same period, reflecting the immediate impact of shifting consumer incentives and economic pressures. ## Market Implications The automotive sector is navigating a period of significant policy divergence. On one hand, the **National Electric Vehicle Infrastructure (NEVI)** program is back on track after a federal court overturned a funding freeze. More than 40 states are now proceeding with contracts to expand the EV charging network, a move that benefits companies like **ChargePoint Holdings Inc. (CHPT)**. On the other hand, the administration has taken steps that temper the EV transition. These include revised, less stringent fuel economy standards, the elimination of penalties for failing to meet Corporate Average Fuel Economy (CAFE) targets, and the scaling back of the $7,500 federal EV tax credit. This policy shift has influenced corporate strategy, with companies like **Uber** reportedly reducing EV incentives for its drivers as it falls behind its own emissions targets. ## Expert Commentary Industry leaders maintain a long-term positive outlook despite the near-term volatility. Rick Wilmer, CEO of **ChargePoint**, commented on the restoration of federal funding for charging infrastructure, stating, “It’s kind of a return to where it was before it was paused. For us, it feels pretty good.” While acknowledging that EV demand is not currently “booming” in North America, he affirmed that it is “steady.” Wilmer added, “And we’re very convinced that EVs are just better products than internal combustion vehicles. And in the end, the better product is going to win.” ## Broader Context The U.S. automotive industry is at a strategic inflection point, balancing immediate policy-driven market conditions with a long-term transition to electrification. There are nearly 20 million electric and plug-in hybrid vehicles on U.S. roads, constituting 6.5% of all vehicles, which signals a foundational consumer shift. However, automakers and their suppliers remain cautious, not only due to the fluctuating domestic policy environment but also because of external trade uncertainties, including industry efforts to preserve the **United States-Mexico-Canada Agreement (USMCA)** against proposals for its dissolution. The tension between regulatory headwinds and the underlying momentum of EV technology and infrastructure investment will be a defining feature for automakers like **General Motors**, **Polaris**, and **Blue Bird** in the coming years.