The global electric vehicle (EV) market was a study in contrasts in 2025.
While global sales surged by 21 percent, fueled by China’s continued dominance and a resilient European recovery, the North American market faced significant headwinds on the back of policy changes.
How did the EV market perform in 2025?
Global EV sales hit 18.5 million units in the first 11 months of 2025, according to EV market research firm Rho Motion, up 21 percent year-on-year. “Overall, EV demand remains resilient, supported by expanding model ranges and sustained policy incentives worldwide,” said Charles Lester, the company’s data manager.
While sales are up significantly in two of the three major regional markets (Europe, 36 percent, and China, 19 percent), North America continues to be the laggard, with total sales down 1 percent over the year so far.
China remains global EV market leader
At 11.6 million units, China’s EV sales represented 62 percent of total global sales through November 2025, as per Rho Motion. Chinese EV maker BYD (HKEX:1211,OTC Pink:BYDDF) is also the world’s largest EV manufacturer.
What’s more, China’s dominance in the global EV market extends beyond its borders.
“Record overseas sales from BYD reflect the growing global reach of Chinese EV makers,” said Lester.
Rho Motion reported that BYD saw record EV export levels this year in both June (90,000 units) and November (131,935 units). The fastest-growing export markets this year were in Europe (400 percent), Southeast Asia (100 percent) and South America (50 percent).
EV market alive and well in Europe
European EV sales came to 3.8 million units in the first 11 months of 2025, up 33 percent compared to the same period in 2024. However, the story hasn’t been positive for all markets in the region this year, especially as governments cut back on subsidies and tax breaks in the face of growing national debt. For example, Rho Motion notes that French EV sales were negatively impacted in 2025 after the government cut subsidies.
However, November was a bright light for Europe’s EV market after governments in France, Italy and UK offered up “new incentives and wider model availability.’ Somewhat reversing course, the French government increased EV subsidies for low-income households beginning in September in a bid to encourage them to make the transition.
The growth in Europe comes alongside the increasing popularity of small-size battery electric vehicles (BEVs), as well as Chinese-made plug-in hybrid electric vehicles (PHEVs), which are not impacted by European tariffs on BEVs.
North American EV market struggling
North American EV sales in 2025 were down 1 percent to 1.7 million units sold as of November 30.
The Canadian government ran out of funding for incentives for its zero-emission vehicle program in January 2025, with no replacement scheme on the horizon. Facing slower EV adoption, economic headwinds and pressure from auto makers, Canadian Prime Minister Mark Carney has also paused the 2026 Electric Vehicle Availability Standard, which had mandated that 20 percent of new light-duty vehicle sales in the country be zero-emission vehicles.
Interestingly, EV sales in the US experienced a record period in the third quarter of this year. But that was only because US President Donald Trump’s administration decided to take an abrupt U-turn on EVs, ending tax credits for car buyers as part of the One Big Beautiful Bill Act, which passed in July. Consumers rushed to make purchases of EVs and PHEVs to take advantage of the US$7,500 tax credit before it expired on September 30, 2025.
Overall for 2025, EV sales in the US are expected to drop by 2.1 percent year-on-year, according to Cox Automotive. That would be the first time in six years for yearly sales to post negative growth.
BEVs also lost ground to traditional combustion engine vehicles this year, representing just 7.8 percent of the total vehicle market in the US compared to the 8.1 percent won last year. “It’s not a huge drop. And maybe the situation isn’t as dark as some headlines would have you believe. But it’s a notable shift, particularly when you consider the trajectory of EV sales over the last several years,” stated Tim Levin, senior editor at InsideEVs.
EV market not going away
The volatility the EV market has experienced in 2025 isn’t going anywhere; however, the EV market outlook for 2026 is still one of robust growth, especially outside of North America.
“And Europe certainly hasn’t given up on electric cars. They’ve doubled down,” said Tiggre.
“If you thought that Europe was going to give up and go back to gas guzzlers, COVID didn’t make them do it. War with Russia didn’t make them do it … I really believe it’s not going away,’ he added.
In 2026, as many as 116 million EVs could be on the world’s roads, according to Gartner, a global research and advisory firm. That figure includes light passenger vehicles, buses, vans and heavy trucks, and represents a 30 percent increase over 2025. China’s reign as the leading geographical market for EVs will continue into the new year as the nation is set to account for 61 percent of all globally registered EVs in 2026.
For 2026, Economist Intelligence Unit is predicting that although declining consumer enthusiasm is translating into slower sales growth, “EVs will remain the best-performing segment of the global auto market in 2026.
New EV growth rate vs. new EV penetration.
Chart via the International Energy Agency.
Economist Intelligence Unit reports that total year-on-year sales growth for EVs, including BEVS, PHEVS and fuel-cell vehicles, will slow from 31 percent in 2025 to 15 percent in 2026.
However, EVs will still account for 38 percent of total new vehicle sales worldwide.
According to the firm, key catalysts for the EV market that investors should watch in 2026 include: China’s export license requirements on fully assembled BEVs and PHEVs, set to begin January 1; the renegotiation of the USMCA free trade agreement in July; and stricter Euro 7 emission standards slated to come into play on November 29.
Hybrids to dominate in changing North American EV landscape
Another key trend to watch in 2026 is hybrid vehicles — experts believe consumers are likely to check their range anxiety with hybrids, and Gartner is forecasting that PHEV sales will rise by 32 percent in 2026.
The results of a survey conducted by CDK Global support this forecast, showing a significant drop in North American consumer interest for EVs. Among those currently driving gas-powered vehicles, only 11 percent reported an interest in purchasing a pure EV. That’s down 20 percent from last year’s survey.
The percentage of hybrid owners interested in purchasing a fully electric vehicle for their next ride also dropped from 54 percent in the 2024 survey to 35 percent in the latest version. At 54 percent, PHEV drivers were the most enthusiastic about BEVs, down only 4 percent from last year. Some of the most common reasons cited for the lack of interest in EVs were the cancellation of federal tax credits and “don’t suit my lifestyle.’
Carmakers are responding to the shift in consumer sentiment by slowing the rollout of new EV models and focusing their manufacturing efforts on hybrids rather than fully electric vehicles. For example, Ford Motor (NASDAQ:F) has pulled the plug on its all-electric F-150 Lightning pickup truck, and instead will opt for producing a hybrid version.
The announcement followed the Trump administration’s decision to cut back on US Corporate Average Fuel Economy standards. “Under the new rule, manufacturers will only need to meet a fleetwide average of ~34.5 mpg by 2031, a big reduction compared to the roughly 50.4 mpg target under the previous rule,” reported Rho Motion.
Additionally, Economist Intelligence Unit says Toyota Motor (NYSE:TM,TSE:7203) is planning to reduce its annual EV sales target for 2026 from 1.5 million units to just 800,000 units, while Honda Motor (NYSE:HMC,TSE:7267) and Nissan Motor (TSE:7201,OTC Pink:NSANF) both plan to cut US production of one electric SUV model each.
“This change of pace will allow them to streamline their operations as trade barriers upend supply chains in 2026. However, backtracking on EV plans now may be detrimental in the longer term for carmakers, as the industry around them continues its shake-up,” the firm’s analysts state.
During his keynote speech at Benchmark Week in November, Stephen Kosowski, manager, long-range strategy and planning, at Kia North America, echoed these sentiments.
“We have a regulatory enforcement that’s ended, right? So EV sales are now shifting to natural demand,” he said. “We’re going to see a rebalancing of production to demand in the marketplace.”
According to Kosowski, regulations and consumer incentives were behind many of the technological advance, range increases and new model lines coming out of the North American EV market. Now that those regulations and incentives are effectively gone, BEVs will likely account for less of the total market share in North America.
With the majority of buyers being higher-income coastal elites, pure EVs lack broader market appeal, explained Kosowski. For EV producers to continue selling into a market facing economic uncertainties, hybrids are the best bet.
“What are the roadblocks? Price in particular, range and charging,” he said. “Hybrids, to us, are the path forward.”
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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