Is the Global EV Boom Stalling? Lucid’s Warning Signals an ‘EV Winter’ for the West

Is the seemingly unstoppable march toward electric vehicles hitting a significant speed bump in the world’s wealthiest markets? According to Marc Winterhoff, the interim CEO of US luxury EV maker Lucid, the answer is a clear yes. He recently confirmed that Lucid is experiencing a noticeable slowdown in electric vehicle demand across both the United States and Europe. For Western investors and consumers accustomed to exponential growth, this admission—backed by recent analyst downgrades across the EV sector—serves as a critical wake-up call.

This isn’t just anecdotal; it’s a structural shift impacting everyone from startups like Lucid to giants like Tesla. Why is this happening now, and what does it mean for the future of electrification outside of China?

The Policy Cliff: Tax Credits and Pull-Forward Demand

A major contributing factor cited by Lucid’s leadership is the expiration of crucial government incentives. In the US, the termination of the $7,500 federal tax credit caused a significant surge in consumer activity leading up to its September deadline, effectively pulling future sales into Q3. This created an artificial spike that has resulted in a leaner demand landscape immediately following the deadline.

This phenomenon echoes broader trends:

• US Market Effect: Morgan Stanley analysts specifically cited the loss of federal tax credits as a reason for downgrading Lucid and Rivian, warning of an ‘EV winter’ extending into 2026.
• European Headwinds: In Europe, stagnation follows the reduction or removal of purchase subsidies in high-volume markets like Germany. Analysts note that uncertainty around regulation and the lack of affordable models are key barriers.
• Lucid’s Insulation (and Limits): Winterhoff stated that Lucid is somewhat insulated by its existing order backlog, but acknowledged the undeniable slowdown in new orders across both continents.

The Broader Market Reality: Affordability and Infrastructure

Lucid’s premium positioning offers some insulation from subsidy changes, but the underlying market challenges are systemic. Broader industry analysis confirms that the deceleration is not just about federal policy timing; it’s about fundamental consumer friction points:

• Affordability Squeeze: High interest rates, combined with the loss of incentives, are making EVs too expensive for many mainstream buyers. Morgan Stanley projects US EV volumes could fall by nearly 20% in 2026 as consumers face a ‘triple squeeze’ of cost, tighter credit, and inflation.
• Infrastructure Anxiety: Real-world ownership experiences, even in EV-leading areas like California, highlight anxiety over unreliable or slow public charging infrastructure.
• The China Contrast: In stark contrast, China is expected to see steady growth, with BEVs potentially accounting for over 50% of sales by 2030, two years faster than previously forecast, due to greater regulatory certainty and infrastructure buildout.

What This Means for Lucid’s Trajectory

Lucid’s immediate focus is on steadying the ship while navigating this challenging environment. The company is pushing forward with its Gravity SUV, which is slated for a European launch this year and initial deliveries in Q1 2026. However, the analyst outlook remains cautious:

The Long View: Is the EV Transition Over?

Despite the immediate headwinds causing stagnation in Europe and a predicted contraction in the US, the long-term outlook is not entirely bearish. Many analysts believe the current slowdown is a short-term correction following unsustainable growth fueled by incentives. Global EV sales still grew by 22% year-over-year in the first half of 2024, outpacing the total market growth of 3.7%. The consensus remains that EVs are essential for long-term climate goals.

For Western OEMs, the message from Lucid’s CEO is clear: the next phase of growth will be harder won, relying less on mandates and more on true consumer value, affordability, and robust charging networks.

Recommended Reading for EV Investors

To better understand the competitive landscape in which Lucid operates, we recommend reading ‘The Electric Bible: The Definitive Guide to Understanding the Global EV Revolution’ by an industry thought leader to contextualize these market shifts.