US clean-energy investments hit a record $75 billion in the third quarter of 2025, driven almost entirely by consumers scrambling to buy electric vehicles before federal tax credits expired on September 30, according to new data from Rhodium Group and MIT.

But the headline number conceals a brutal truth: EV manufacturing investments collapsed 30% compared to the same period last year, and companies canceled $2 billion worth of battery projects.

The contradiction reveals exactly what happens when an industry built on government subsidies faces actual market conditions. Record consumer spending driven by desperation, paired with manufacturers abandoning ship before the policy cliff even arrives.

The Rush Before The Fall

Zero-emission vehicle sales reached $31.2 billion in Q3 2025, marking a 32% increase from the previous quarter as buyers raced to claim the expiring $7,500 federal tax credit for new EVs and $4,000 credit for used vehicles.

Congress eliminated these incentives through President Trump’s “One Big Beautiful Bill” in July 2025, setting the September 30 deadline that triggered the purchasing frenzy.

The surge mirrors the pre-deadline panic EVXL documented throughout summer 2025, when dealers offered approximately $9,800 in additional incentives and Tesla prominently displayed banners warning buyers to take delivery before the cutoff.

But this wasn’t sustainable growth. It was a fire sale.

Manufacturing Investment Craters

While consumers rushed to buy, manufacturers were heading for the exits.

EV manufacturing sector investments dropped 30%, or $8 billion, compared to Q3 2024, according to the Rhodium Group analysis. Companies also canceled $2 billion worth of battery manufacturing projects during the same quarter.

The timing is critical. These investment decisions happened before the tax credit expired, signaling that manufacturers saw the collapse coming and adjusted accordingly.

General Motors announced in late October it would lay off more than 3,400 workers across battery plants and EV facilities, with CFO Paul Jacobson stating the company expects “EV demand growth to slow pretty significantly.”

Ford halted F-150 Lightning production indefinitely, while the company’s Model E electric vehicle division lost $3.6 billion through the first nine months of 2025.

The Post-Subsidy Reality

The fourth quarter validated manufacturers’ pessimism with stunning speed.

October 2025 EV sales dropped 24% in a single month after the tax credit expired, falling from 98,289 units in September to just 74,897 units.

Light vehicle sales overall decreased 6.5% to a seasonally adjusted annualized rate of 15.3 million units, marking the lowest sales pace in 15 months.

The carnage extended across America’s $28 billion Battery Belt, where GM idled $2 billion battery plants in Warren, Ohio and Spring Hill, Tennessee barely two months after the credit expired.

Battery plants designed for thousands of workers sit largely empty. Multibillion-dollar facilities remain unfinished shells. The promised 5,000 jobs at Ford’s Kentucky plant turned into 1,450 actual positions.

Global Context Shows US Lagging

The Rhodium report notes that globally, EVs are rising in more countries even amid US policy headwinds, though they remain heavily concentrated in China, the EU, and US, according to International Energy Agency data.

China sold over 11 million EVs in 2024, with electric cars accounting for almost half of all car sales. The country is projected to reach around 60% EV market share in 2025, supported by continued government incentives and falling prices.

Europe saw EV sales stagnate in 2024 as subsidy schemes waned, but the sales share remained around 20%. New emissions standards taking effect in 2025 are expected to drive European EV sales to a 25% market share.

The US, meanwhile, is experiencing the textbook consequences of removing subsidies without building genuine market demand.

Heat Pumps And Storage Face Same Fate

Tax credits for two other types of consumer-facing clean technology face the same September 30 fate: heat pumps and distributed power and storage systems are set to lose their incentives at year’s end.

The pattern is repeating. The question is whether those sectors will see the same panic-buy surge followed by investment collapse.

EVXL’s Take

This Rhodium Group data is the smoking gun that validates every warning EVXL published throughout summer 2025 about subsidy-dependent markets.

Back in June, we covered Senate Republicans pushing to end the tax credit and immediately flagged the impending crisis. When the bill passed on July 4, we explained exactly what would happen: a brief surge as buyers rushed to beat the deadline, followed by a devastating collapse.

The Rhodium numbers prove we were right, but the timing is even more damning than we expected. Manufacturers weren’t just pulling back after the subsidy expired. They were abandoning investments during Q3 2025 while the subsidies still existed and consumer sales were surging.

That $8 billion manufacturing investment decline happened in the same quarter that saw record consumer spending. Let that sink in. Companies watched Americans spend $31 billion on EVs and responded by cutting factory investments by 30%.

Why? Because they knew those sales were artificial. Pull-forward demand driven by policy panic, not sustainable market dynamics.

The October collapse validated their judgment. EV sales cratered 24% the moment the subsidies ended. Within weeks, GM idled $2 billion in battery plants and laid off 3,300 workers. Ford stopped making F-150 Lightnings with no restart timeline announced.

The broader pattern across America’s $28 billion Battery Belt tells the complete story: stalled construction sites, mass layoffs, and desperate pivots to non-EV products. Despite $28 billion in taxpayer subsidies, the grand vision of Midwest EV dominance collapsed just six weeks after federal tax credits expired.

Compare this to China’s approach. Chinese manufacturers achieved genuine cost advantages through integrated supply chains and manufacturing efficiency. Two-thirds of EVs sold in China in 2024 were priced lower than their ICE equivalents, even without subsidies. That’s actual competitiveness, not subsidy dependency.

European automakers are struggling too, but they’re facing genuine market forces like overcapacity and Chinese competition, not the sudden removal of the training wheels that were holding up their entire business model.

The heat pump and distributed storage sectors should be watching closely. Their tax credits expire December 31, 2025. If the pattern holds, expect a Q4 buying surge followed by a manufacturing investment collapse in early 2026.

What’s particularly galling is how the $75 billion headline number will be spun by advocates as proof that clean energy investment remains strong. That figure is technically accurate but fundamentally misleading. Strip out the panic-driven consumer purchases, and you’re left with an industry in retreat.

This echoes patterns we’ve documented at our sister site DroneXL, where protectionist policies and subsidy-dependent business models often backfire spectacularly. When you build an industry on government support rather than genuine competitive advantages, removing that support exposes the weakness immediately.

The Trump administration is now touting a vehicle loan interest deduction as a replacement benefit, but that provides a fraction of the support the $7,500 credit offered. It’s political theater designed to distract from the wreckage.

Looking ahead six months, expect continued consolidation in the US EV market. Startups without deep pockets will disappear. Traditional automakers will scale back EV commitments further. Chinese manufacturers will continue gaining global market share while American battery plants sit idle.

The Rhodium report inadvertently documents the precise moment when subsidy-dependent industrial policy hit the wall. Record investment numbers masking catastrophic structural retreat. It’s exactly what EVXL predicted, and exactly what happens when you confuse government support with actual market demand.