Heat pump sales defy the post-subsidy slump that killed EV demand

Conventional wisdom said axing the $2,000 federal tax credit would kneecap US heat pump adoption. The data says otherwise. In the first quarter of 2026, shipments of the hyper-efficient electric appliances actually climbed, outpacing natural-gas furnace sales by 32% and following a seasonal growth curve that looks stronger than in previous years. That’s a stark contrast to what happened with electric vehicles, where sales plummeted after their own $7,500 credit evaporated in September 2025. UC Berkeley energy economist Lucas Davis crunched the numbers from the Air Conditioning, Heating, and Refrigeration Institute and came to a blunt conclusion: the US heat pump market doesn’t need the subsidy. “It appears that the U.S. market for heat pumps is strong enough that it does not depend on tax credits,” he writes in his analysis.

This resilience is genuinely surprising. Heat pumps still carry a higher upfront installation cost than gas furnaces, which is precisely why governments from Berlin to Beijing have been underwriting them. The appliances work by running a refrigerant through a compression-expansion loop that moves heat rather than generating it, delivering efficiency levels that make them cheaper to operate month-to-month than combustion-based rivals. That operating-cost advantage, combined with their role in decarbonizing buildings, was supposed to be the long-term pitch. The fact that consumers kept buying even after the incentive vanished suggests the economics are already compelling enough on their own.

The numbers have been building toward this moment. Heat pump sales in the US have doubled over the last 15 years, and the appliances have now outsold gas furnaces for four consecutive years. The post-subsidy data from early 2026—shipments flat from December to January, then gradually rising—mirrors seasonal patterns from prior years, just with a slightly sharper upward slope. No purchasing cliff. No panic. Just a market that appears to have reached escape velocity, even as the Trump administration’s broader rollback of Inflation Reduction Act programs reshapes clean-energy incentives.

I’ll admit, I expected a different outcome. When I wrote about heat pumps making MIT Technology Review’s breakthrough technologies list in 2024, the policy tailwinds were still part of the story. Watching the EV tax credit expire and crater demand only reinforced that instinct. But heating and cooling is a more intimate purchase than a car—it’s about monthly bills and home comfort, not range anxiety and charging infrastructure. The real test comes next winter, when the seasonal sales dip hits without any federal cushion. For now, though, the era of the heat pump is proving more durable than the policies that helped launch it.