Global EV market splits as US falls behind
▼ Summary
– Global EV sales surpassed 20 million units in the last year, reaching 25% market share, with the highest growth in China and a 75% sales increase in Latin America, while U.S. sales stagnated around 10%.
– U.S. EV market growth was hindered by the One Big Beautiful Bill Act eliminating tax credits and policies blocking Chinese automakers, challenging startups like Rivian and Lucid.
– Chinese automakers drove EV growth globally, with nearly 55% of new vehicles in China being electric and over half of EVs in Southeast Asia made by Chinese companies, aided by affordable prices.
– The IEA report notes that affordable Chinese EVs have brought down prices in emerging markets, but dealers may resist accepting more vehicles due to oversupply, and countries could impose tariffs.
– Legacy automakers like Honda, which cut EV projects, risk losing global market share and missing cost-cutting and software trends, as EVs are expected to become cheaper to produce than fossil fuel cars by next year.
The electric vehicle market is not in crisis globally, only in the United States. A new analysis from the International Energy Agency reveals that EV demand is surging worldwide, even as American sales stagnate.
Global EV sales surpassed 20 million units last year, capturing a 25% share of the total automotive market. China led the charge, but other regions are accelerating rapidly. Latin America saw a 75% jump in EV sales, while the U. S. remains stuck at roughly 10% market share. This divergence has created a K-shaped market where some segments thrive while others struggle, and automakers of all kinds,from legacy giants to ambitious startups,must take notice.
U. S. sales were hampered by the One Big Beautiful Bill Act, which eliminated EV tax credits, and by policies that block Chinese automakers from entering the domestic market. For American-focused startups like Rivian and Lucid, this creates a steeper uphill climb. Legacy automakers have a temporary cushion from profitable fossil fuel vehicles, but without a robust EV strategy, they risk losing significant global market share as consumer preferences evolve.
The upper leg of the K is being driven by Chinese automakers. In China, nearly 55% of new vehicles sold were electric, aided by affordability: more than two-thirds of EVs there cost less than the average gasoline car. Chinese brands are also pushing growth in Southeast Asia, Latin America, and Europe. For instance, over half of all EVs sold in Southeast Asia came from a Chinese company, and Europe imported more than half a million Chinese EVs.
This rapid adoption in developing economies challenges the belief that EVs are too expensive for emerging markets. In Thailand, EV prices have matched those of internal combustion vehicles for two years. The IEA report notes, “Imports of affordable electric cars from China have brought down prices and driven up EV sales in many emerging markets in recent years.”
However, this momentum may face headwinds. Chinese automakers exported over 25% more vehicles than foreign markets purchased, potentially leading dealers to resist further inventory. Countries may also push back with tariffs on the influx of cheap Chinese EVs. Yet, betting against Chinese brands would be unwise. The Communist Party has heavily invested in making its automotive industry a global powerhouse, giving the country enough manufacturing capacity to meet 65% of worldwide demand. State support allows Chinese companies to produce at scale far longer than competitors can stay solvent.
Long-term, EVs are poised to undercut fossil fuel vehicles even without subsidies. According to Gartner, battery electric vehicles will be cheaper to manufacture than internal combustion vehicles as early as next year. The Trump administration is pushing the U. S. market back toward fossil fuels, perhaps believing the domestic market is unique, but it faces strong headwinds. The market for gasoline passenger vehicles and light trucks peaked in 2017, per BloombergNEF, and while hybrid sales are rising, they lag behind pure EV growth.
A cautionary example comes from Japan. Honda, which recently killed three EV projects, has jeopardized its future as a global automaker. By retreating from EVs, it misses critical lessons that have helped companies like Tesla and BYD cut costs. Since EVs are ideal platforms for software-defined vehicles, Honda also risks falling behind on another industry trend that reduces expenses.
This paints a grim picture for legacy automakers that have scaled back EV ambitions. Companies that fail to strengthen their EV strategies could lose ground to global competitors, sacrificing the revenue needed to stay competitive for years.
(Source: TechCrunch)
