A record surge in global adoption masks a deepening rift as China achieves historic price parity while Western protectionism and policy reversals stall momentum in North America.
23 Jan 2026 | 437 Views | By Anurag Chaturvedi
Global electric vehicle sales reached 20.7 million units in 2025, representing a 20% year-on-year increase that pushed EVs beyond one-quarter of worldwide passenger car sales, according to Benchmark Mineral Intelligence. This annual milestone was characterised by significant quarterly volatility, as sales grew 33% in the first half of 2025 before ...
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Global electric vehicle sales reached 20.7 million units in 2025, representing a 20% year-on-year increase that pushed EVs beyond one-quarter of worldwide passenger car sales, according to Benchmark Mineral Intelligence. This annual milestone was characterised by significant quarterly volatility, as sales grew 33% in the first half of 2025 before slowing to a mere 4% in Q4 when consumers rushed to claim expiring incentives in Europe and North America. Regional divergence sharpened during this period because China cemented its dominance with 12.9 million units, or 62% of the global share, while Europe rebounded 33% to 4.3 million units. Conversely, North America contracted 4% to 1.8 million units, standing as the only major region to experience a decline.
In China, two-thirds of battery electric vehicles now cost less than comparable internal combustion engine vehicles without the need for subsidies. According to the International Energy Agency (IEA), this marks the first time that pure economics has overtaken environmental policy as the primary driver of adoption in the world’s largest market. For emerging economies, energy security provides a parallel imperative that encourages nations like Vietnam and Thailand to adopt EVs. By doing so, they are reducing capital outflows for fossil fuel imports and leapfrogging legacy automotive infrastructure to cut dependence on volatile oil markets.
Experts suggest that China’s EV sales have eclipsed the broader market’s trajectory by exceeding total 2022 global sales three years ahead of industry forecasts. Battery electric vehicle sales rose by 26% while plug-in hybrid sales grew by just 6%, indicating that consumers increasingly view EVs as primary vehicles rather than transitional options. Corporate strategy reflects this shift, as seen by Stellantis planning to eliminate its entire PHEV lineup for 2026 to pivot toward range-extended electric vehicles (REEVs) and pure BEVs.
This competitive edge stems from manufacturing integration, where cost advantages are driven by vertically integrated supply chains. Battery pack prices in China fell by 30% in 2024, which significantly outperformed the 10–15% declines seen in Europe and the United States. Furthermore, BYD more than doubled its EV exports from 400,000 units in 2024 to over 1 million in 2025, supported by its affordable Seagull model that sold approximately 440,000 units.
Extended-range electric vehicles captured 60% of China’s large SUV segment by offering approximately 120 kilometres of electric-only range with combustion backup. However, growth in this sector slowed to 4% in late 2025 because mid-2024 subsidy increases created difficult year-over-year comparisons. The upcoming 2026 introduction of a 50% purchase tax to replace the full exemption threatens further deceleration for the industry.
Europe’s EV growth rebounded to 4.3 million units, up from 3.2 million, as a direct result of regulatory pressure rather than organic consumer demand. While EU carbon emissions standards require a 15% reduction from 2021 baselines, a March 2025 policy adjustment allowed manufacturers to average compliance over a three-year window. This paradoxically accelerated 2025 sales because automakers chose to front-load deliveries.
Germany’s previous reliance on fiscal support became evident when the termination of €4,500 per-vehicle subsidies triggered a 4-percentage-point market share decline. German BEVs remained 20% more expensive than conventional cars throughout 2024, while U.S. premiums reached 30%.
Chinese-produced EVs accounted for 19% of European sales in 2025, with Chinese OEMs representing two-thirds of these imports. Even though the EU implemented countervailing duties ranging from 7.8% to 35.3%, this expansion has not been stemmed. Consequently, Brussels is now negotiating minimum pricing mechanisms for Chinese BEVs to neutralise China’s cost advantage and protect domestic manufacturers from price-based competition.
The elimination of federal tax credits in the United States created distinct market phases, starting with a Q3 boom as consumers rushed to claim incentives and ending with a Q4 collapse of 49%. Model availability compounded this challenge, given that only two small electric vehicles—the Mini Cooper BEV and Fiat 500 BEV—were available, selling a combined 3,000 units. Since nearly 90% of U.S. EV models are large cars or SUVs, Benchmark projects that U.S. plug-in sales will decline 29% in 2026 due to limited incentives and manufacturers scaling back electrification investments.
North America’s 4% contraction reflects both U.S. policy reversals and Canada’s aggressive trade stance. Canada’s 41% market collapse followed the 2024 introduction of a 100% tariff on Chinese EVs, which mirrored U.S. policy and combined with subsidy removals to block the affordable models driving growth in other global regions.
The “Rest of World” category surged 48% to 1.7 million units, with Chinese imports accounting for over 85% of growth in South America and Southeast Asia. South Korea posted a 50% year-on-year increase that was driven by new domestic models from Hyundai and Kia, alongside sustained government incentives that insulated the market from the policy reversals affecting the West.
Southeast Asia nearly doubled its volume year-over-year by averaging 55,000 monthly EV sales in late 2025. Vietnam reached a 40% market share while Thailand exceeded 20%, which allowed both to surpass the average EU penetration rate and overtake the UK in adoption speed. Indonesia also surpassed the United States in EV market share, reflecting a strategic leapfrog where nations bypass legacy infrastructure to transform an environmental initiative into an economic imperative.
Brazil more than doubled its sales to 125,000 units, with 85% of that volume coming from Chinese imports as price premiums shrank to 25%. Before the temporary exemption from Brazil’s 35% import duty terminates in mid-2026, manufacturers like BYD and GWM are establishing local manufacturing to maintain their presence.
India’s 2.27 million total EV sales rose 16%, even though growth slowed from the previous year. Electric three-wheelers made India the world’s largest market for that segment for the third consecutive year, while electric passenger vehicle sales surged 77% to 176,980 units. Tata Motors’ dominance eroded as its market share fell to 40% while JSW MG Motor and Mahindra expanded their reach.
EV adoption increasingly hinges on trade policy rather than technology readiness. While Chinese manufacturers have achieved price parity with combustion vehicles through models like the $10,000 BYD Seagull, North American consumers cannot access these options. Prohibitive tariffs and eliminated tax credits have barred the world’s most affordable EVs, forcing American buyers toward premium domestic models that remain 30% more expensive than conventional alternatives.
Europe occupies an intermediate position where countervailing duties remain lower than North American tariffs, yet the negotiation of minimum pricing signals hardening resistance. This protectionist escalation creates a bifurcated global market in which developing economies leverage Chinese imports to electrify rapidly, while Western markets prioritise domestic industrial policy. This shift suggests that trade barriers may determine the pace of the energy transition as much as climate policy.
Global lithium-ion battery demand rose 29% to 1.59 TWh, with battery energy storage systems growing faster than automotive applications. Global average EV range has stabilised at approximately 340 kilometres, though small cars average 150 km while medium and large vehicles exceed 350 km. China’s plug-in hybrid electric-only range reached nearly 100 km, which is over 50% longer than the average in Europe and the U.S.
Model availability is expected to expand toward 1,000 globally by 2026, yet 70% of these vehicles fall into the large car, SUV, or pickup segments.
Under current policies, the IEA projects that EVs will represent over 40% of global passenger car sales by 2030. China’s trajectory points toward an 80% market share, whereas Europe’s projected 60% share depends on regulatory certainty and the political willingness to accommodate industry pressure.
The U.S. presents the starkest reversal with a projected 20% market share by 2030, which is down from the 40% forecast originally made in 2024. By 2030, 39 countries are expected to surpass a 10% EV sales share, proving that electrification has become a global transformation. EVs across all modes are expected to displace more than 5 million barrels of oil daily, yet the concentration of battery production in China remains a vulnerability as Western efforts to relocate production proceed slowly and at a higher cost.