Introduction

Introduction

While the rest of the world is actively advancing electric vehicle (EV) development, the United States has become the sole outlier.

Some time ago, Antonio Filosa, CEO of Stellantis Group, stated at an analyst meeting that the global automotive market is now clearly split: the United States, and everywhere else.

It’s important to note that Stellantis Group is a global automotive conglomerate spanning Italy, France, and the United States, with Antonio Filosa overseeing numerous brands distributed across every corner of the globe. His assessment of the global situation essentially represents the pronounced regional characteristics of the global automotive market.

Therefore, he must navigate varying U.S. trade and policy environments in other regions, including Europe, as well as engage in cooperation with China.

Faced with the U.S. market—an island unto itself—Stellantis faces challenges, including those faced by its competitors, in developing vehicles for this major profit center, as U.S. regulations and consumer demands differ sharply from the rest of the world.

Antonio Filosa stated that in the United States, the automaker relies entirely on local engineering and R&D capabilities. In other markets, including Europe, Stellantis collaborates with other automakers, including China’s Leapmotor and Dongfeng Motor.

Although Antonio Filosa indicated that these partnerships do not plan to launch models in the United States, other automakers that have reached similar agreements have faced criticism from the Trump administration. For example, U.S. officials have sharply criticized Ford Motor Company for signing a joint venture agreement with China’s Geely Auto.

Conversely, Ford has stated in Europe that it supports the global expansion of Chinese automakers. Ford also noted that it is adapting to the new global landscape and becoming more streamlined and flexible through these partnerships.

01 U.S. Hits the Brakes

Since last year, electric vehicles have swept across the globe—except the United States. According to the International Energy Agency’s (IEA) annual report released a few months ago, global EV sales will grow by 20% in 2025, surpassing 20 million vehicles, with one in four new cars sold globally being electric.

However, according to Kelley Blue Book, a subsidiary of Cox Automotive, U.S. EV sales declined by 2% last year.

The reason is that rising global fuel costs have driven consumers to switch to EVs at an unprecedented pace. U.S. gasoline prices also surged, breaking through $4 per gallon in April. However, consumers had fewer EV options, especially in the affordable car segment.

Chinese EVs, which drive global EV growth, face a 100% tariff in the United States, in addition to a 25% additional tariff on all imported vehicles. In most countries, even without subsidies, owning an electric compact sedan costs less than a gasoline equivalent within five years.

But these cars are made in China and are shut out of the U.S. market. No U.S. automaker currently produces a comparable alternative at a similar price.

Last September, a policy providing U.S. consumers with a $7,500 EV purchase subsidy expired. From the end of 2024 to the end of 2025, the United States gradually stopped importing the lowest-priced foreign models, increased prices of other imported models through higher tariffs, and eliminated subsidies that had previously made EVs more accessible to U.S. consumers.

According to a Kelley Blue Book report, U.S. auto sales in the fourth quarter of 2025 fell 36% year-over-year, and 27% in the first quarter of 2026. Quarterly EV sales for several major U.S. automakers dropped by 60% to 70%.

In contrast, the European Union and Canada have opened their markets to Chinese EVs. In January, the EU allowed Chinese automakers to sell EVs, provided prices exceed a minimum threshold; Canada permitted imports of Chinese EVs starting in March, reducing tariffs from 100% to 6.1% and setting an annual import cap of 49,000 vehicles.

According to IEA data, European EV sales grew by over 30% in 2025, with the Asia-Pacific market (excluding China) up 80% and Latin America up 75%. In March, about 30 countries set new monthly EV sales records. Additionally, the Middle East conflict accelerated the shift from gasoline to electric vehicles in countries where affordable EVs are prevalent.

In the first quarter of this year, EVs accounted for just 5.8% of U.S. new car sales, roughly half the share from six months earlier. David Hart, a senior fellow at the Council on Foreign Relations, a New York-based think tank, believes, “U.S. consumers will gradually realize what they might be missing. When they travel abroad or when a few cars cross the border into the U.S., some will witness it firsthand.”

China’s strategy is no secret: defeat competitors with low prices—and it works. Although some reviews note that Chinese-made EVs cost slightly less to manufacture than comparable models and offer slightly less driving enjoyment, consumers cannot resist their rock-bottom prices.

U.S. senators are well aware of this and do not want it to happen. In the United States, political leaders and organizations continue to resist the entry of Chinese EVs into the U.S. market. Affordable EVs are highly attractive to U.S. households that cannot afford new cars, especially EVs.

U.S. automakers cannot lower prices to such levels or compete. Ford CEO Jim Farley previously stated that this is “not a fair competition.”

Without Chinese EV competition, U.S. automakers continue to launch expensive EVs that ordinary consumers cannot afford. Despite rising gasoline prices, many choose to keep refueling rather than spend $50,000 on an EV. As U.S. consumers resist buying EVs, automakers have decided to adjust their U.S. market plans.

This has led to the cancellation of many EV projects, from supercars to family SUVs. While some automakers are still striving to make EVs succeed, prices remain too high to attract U.S. consumers, especially when they know Chinese EVs cost $10,000 to $20,000 less.

02 The World Speeds Ahead

When focusing on this year’s data, global EV sales continued to grow in 2026, but growth sharply slowed in August, as a significant decline in North America offset strong gains in Europe and improved monthly sales in the Chinese market.

According to Benchmark Mineral Intelligence, global EV sales reached 1.83 million vehicles in August 2026, up 2% from August 2025. Global EV sales for the first eight months of this year reached 13.4 million, up 4% from the same period in 2025.

August’s figures highlight the growing divergence in the global EV market. Europe continues to see strong growth, while China, despite a year-over-year sales decline, remains the world’s largest EV market. Meanwhile, North America is experiencing a significant downturn following the expiration of U.S. federal EV tax credits.

Last month, Europe was the strongest performer among major EV markets. EV sales grew 36% year-over-year to 380,000 vehicles, though sales fell 15% from July due to the region’s traditional summer sales lull. Despite the month-over-month decline, Europe’s EV market expanded rapidly in 2026. Sales from January to August reached 3.3 million, up 29% year-over-year.

Government incentives, a growing array of lower-priced EV options, and rising fuel costs are helping sustain demand in several key European markets. France, Germany, and the UK, which together account for more than half of European EV sales, have been significant contributors to the region’s growth. France performed particularly strongly in August, with EV penetration reaching a record 41%.

Spain’s new Auto+ subsidy program is expected to inject fresh momentum into the EV market. The program began accepting applications on August 4, offering basic subsidies of up to €4,500 for purchasing new electric passenger vehicles. With a 2026 budget of €400 million, the program replaces the MOVES III scheme, which expired at the end of 2025.

Correspondingly, North America remains the global EV market’s biggest weak link. According to Benchmark Mineral Intelligence, EV sales in the region fell 33% year-over-year to 140,000 vehicles in August. This brings the year-to-date decline in North American EV sales to 21%, with the United States being the primary driver of this slump.

The sharp sales decline is mainly due to difficult year-over-year comparisons caused by the expiration of U.S. federal EV tax credits. Consumers rushed to buy EVs before the policy expired in September 2025, leading to unusually strong sales during the same period last year. As a result, August 2026 sales appear markedly weak compared to the 2025 buying surge.

As consumers continue to weigh price, range, charging infrastructure, and incentives when choosing their next vehicle, hybrid cars have also reclaimed some market share lost to battery electric vehicles (BEVs). September may see another sharp year-over-year decline, as a massive buying wave occurred during the same period in 2025, after federal incentives had expired.

The situation differs in Canada, where the first six-month window for low-tariff imports of Chinese-made EVs ended on August 31. Of the 24,500 available quotas, 15,603 had been used, accounting for about 64% of the total. Unused licenses carried over to the second window, which began on September 1, allowing manufacturers to secure more than 33,000 permits by the end of February 2027.

China’s EV market sold 1.03 million vehicles in August, down 11% year-over-year but up 4% month-over-month. Although Benchmark noted that the year-over-year decline was larger than the 5% drop in July, this change mainly reflects a larger base for comparison with August 2025 rather than a sudden deterioration in underlying demand.

Thus, the market remains vast, with EVs accounting for more than 60% of passenger vehicle sales for the fourth consecutive month. Despite sluggish overall auto demand, lower operating costs for EVs and intensifying market competition continue to drive a shift away from internal combustion engine vehicles.

Within the global EV market, China’s role is also growing. New energy vehicle (NEV) exports surged more than 150% year-over-year in August, reaching about 518,000 vehicles—a new monthly record. Cumulative NEV exports for 2026 have exceeded 3.3 million.

Given this context, even as global EV sales growth slows, demand remains robust. In 2026, the global EV market will enter a more complex phase. From January to August, global auto sales reached 13.4 million, up 4% year-over-year. However, the 2% growth rate in August indicates that momentum is becoming uneven across major markets.

Europe benefits from incentive policies and expanding EV adoption, while China maintains extremely high EV penetration despite a year-over-year sales decline. With the U.S. federal government ending EV incentives, North America faces a tougher adjustment, while markets outside traditional EV leaders are growing rapidly.

For automakers, the message is clear: global EV demand is still rising, but success increasingly depends on individual market conditions, government incentives, pricing, and the ability to compete internationally. There is no denying that global EVs are still on track to achieve another annual sales milestone in 2026.

Editor: Li Sijia Copy Editor: He Zengrong

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