Online car marketplace Carvana has benefited from a strong used car market in 2025.
New car prices have been stable for most of the year, and used car prices have also remained steady in response.
Carvana Q3 results
- 150,941 retail units sold, +44%
- Revenue +55% to $5.65 billion
- Net Income $263 million, +$115 million year over year
- Record levels of retail units sold, revenue, adjusted EBITDA, and operating income
As Kelley Blue Book notes, “when new car prices rise, used car prices tend to follow.”
“New car prices have stayed surprisingly stable through the first six months of the new tariff regime… Automakers and dealerships have absorbed much of the cost of the new tariffs themselves, but warn that they can’t do that forever.”
Strong electric vehicle sales helped the car industry have a banner year across the board in 2025. But now that the U.S. $7,500 EV tax credit that helped drive demand has expired, there is a lot of uncertainty.
Carvana CEO defends EVs, even as demand drops
Carvana’s EV mix is higher than the industry average, so a significant negative shift in electric vehicle demand would, in theory, have a disproportionate impact on the company.
However, CEO Ernie Garcia says that while the expiration of the tax credits hurts, consumer demand for used cars in general remains strong, even if EV demand has faltered.
“I think the evidence so far is pretty clear that it’s just a shift in preference of vehicles, not a change in aggregate demand, at least not one that is noticeable,” Garcia said during the company’s third-quarter earnings call.
Related: Tesla earnings can’t hide this big EV industry issue
“So I think our system is well-positioned to handle that. We’re making sure that we replace the cars that they want based on the actions that they’re taking.”
But he has seen a significant shift in consumer behavior.
“We’ve seen a reduction in EV purchases as a result of the expiration of that credit,” Garcia said.
Despite the changing winds, Garcia defended electric vehicles as the technology of the future.
“I think we continue to be believers in EVs. I think all these new technologies go through their positive moments and their tougher moments. And I think it is true that EVs are a very high-quality fundamental technology that’s early in their curve,” Garcia said.
“And we expect over time that they will make a comeback, and we’ll be well-positioned for it when they do.”
EV sales expected to decline after record-breaking start
The auto industry in the U.S. is expecting EV sales to slow down dramatically.
Last month, GM stated in an 8-K filing that it will lose $1.6 billion due to “the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emission regulations.”
Related: General Motors dishes out worrying update for EV buyers
U.S. EV sales by year + market share of new vehicle sales:
- 2025 (through September): Over 1 million units, 10.5% market share
- 2024: 1.3 million, 8.1% market share
- 2023: 1.2 million, 7.8% market share
- 2022: 800k, 5.8% market share
Source: Cox Automotive
Consumers purchased 90 different EV models in the third quarter, but only nine sold more than 10,000 units.
Tesla TSLA Model Y and Model 3 were ahead of the pack, selling more than 114,000 and 53,000, respectively, and the Chevy Equinox sold just under 25,000.
But those three models were outliers.
According to Cox Automotive, “the vast majority of EVs sell at a rate of far less than 2,000 units a month, or 6,000 units a quarter. In the volume-driven business of automotive manufacturing, low volume is the enemy; EV profitability remains a distant dream for nearly every automaker.”
Related: General Motors has an unlikely ally in race against China
