EV Market Trends: H1 2026 Review and Forecast

Chinese EV makers pivot to exports amid domestic demand slowdown

At 4.9 million units bought over the period, EV sales in China are down 14 percent year-on-year, according to Benchmark’s data. As a result, China’s EV makers are looking to foreign markets to pitch their product.

"China’s vehicle manufacturers continue to accelerate their EV export pivot,” explained George Whitcombe, senior EV analyst at Benchmark. “These manufacturers are increasingly looking to expand further into the global market to offset the subdued domestic environment.”

On the global stage, Chinese auto manufacturers benefit from their nation’s dominance of the global battery supply chain and lower materials costs enabling them to produce some of the world’s lowest-cost EVs.

“Those advantages continue to put pressure on manufacturers in Europe and North America, where smaller production volumes and less integrated supply chains keep battery costs higher,” notes BloombergNEF.

Europe emerges as global EV growth engine

EV sales in Europe experienced a record month in June, up 28 percent month-on-month and 31 percent year-on-year.

A closer look at individual countries in the region shows that this record month of sales was due in large part to booming EV markets in France, Denmark, Spain and Portugal, all of which achieved all-time high monthly sales in June.

“This growth is supported by legislative drivers, subsidies and elevated fuel prices,” stated Whitcombe.

EV Volumes, part of JD Power, said Germany, the region’s biggest EV market, has reintroduced sizable EV consumer subsidies; meanwhile, Spain also launched the Auto+ Program incentive as part of its Spain Auto 2030 plan.

The US-Iran war and the subsequent blockade of the Strait of Hormuz — responsible for 20 percent of global oil transits — has increased prices at the pump for European drivers.

As a result, EVs have gained in popularity among the region’s car buyers in recent months.

“For the first quarter of 2026, it's Europe leading the way, and actually supporting the electric vehicle market at a time when domestic sales in China have fallen in the quarter year-on-year, and similarly the US is continuing to see struggles,” said Rob Searle, senior analyst, battery raw materials, at Fastmarkets.

“Europe has actually seen a support of its EV sales, predominantly due to higher fuel prices as a result of what's happening in the Middle East now," he added at the Fastmarkets Global Lithium, Battery & Critical Materials conference.

Despite subsidies, affordability continues to be one of the biggest roadblocks to wider EV adoption, which has allowed lower-cost Chinese EVs to make inroads into European markets. However, this trend is shifting as government regulations and consumer preferences for domestic products take hold.

While Chinese battery electric vehicles have been subject to countervailing duties since late 2024, Benchmark reported in June that the European Commission is conducting an anti-subsidy investigation into Chinese plug-in hybrid electric vehicles (PHEVs) and considering extending countervailing duties to PHEVs made in China as well.

Automakers are tackling the affordability challenge with smaller EV models.

For example, Volkswagen (ETR:VOW3,OTCPL:VLKAF) has launched a new suite of “Electric Urban Car Family” EVs in Europe, including the Volkswagen ID.Polo, Cupra Raval and Skoda Epiq.

On the consumer side, French car buyers are choosing domestic brands over Chinese EVs with Renault (EPA:RNO) accounting for 20 percent of the EV market share and four of the five top-selling EV brands in the country.

“Renault’s recently released small segment EVs are proving popular, with the new Twingo being France’s third best-selling EV in June despite only starting meaningful deliveries in March,” stated Benchmark.

North American market faces contraction amid policy shifts

North American EV sales totaled 0.73 million units in the first six months of 2026, down 20 percent year-on-year.

The Canadian government has made some compromises to its tariff policies concerning Chinese-made EVs by lowering the 100 percent import tariff to 6.1 percent. The quota is iniitially set at 49,000 vehicles per year and will increase annually over five years to reach to 70,000 units by 2030.

“Amid weaker legislative drivers and the removal of the EV tax credit in the US in September, the contraction of the North American EV market persists,” according to Benchmark. “In the USA, all-electric vehicle sales by GM and Ford are down YTD more than all-electric vehicle sales in the market as a whole.”

As part of the July 2025 passage of the One Big Beautiful Bill Act under the Trump adminsitration, federal fuel economy enforcement was effectively gutted and the US$7,500 tax credit on EVs expired on September 30, 2025.

Car makers such as Ford Motor (NASDAQ:F), Stellantis (NYSE:STLA), Volkswagen and Nissan Motor (TSE:7201,OTCPL:NSANF) have reacted by pulling some of their EV models off the market, as well as delaying or scrapping planned EV models.

The US government, under both former President Joe Biden and current President Donald Trump, has also cracked down on sales of China-made EVs entering the market. Hence, Swedish-based, but Chinese-majority-owned Polestar (NASDAQ:PSNY) is exiting the US market this year after the US Department of Commerce decided not to grant the company authorization to sell its vehicles, reported Benchmark.

Cox Automotive has a more glass half full perspective on the US EV market, pointing to sales performance in the second quarter (-20.5 percent year-on-year) being an improvement over the sharp declines in the first quarter of 2026 (-27.3 percent), and the last quarter of 2025 (-36 percent). “Sales performance in Q2 suggests the market may be stabilizing after the sharp correction,” states the firm in a July 10 report.

Tesla (NASDAQ:TSLA) still dominates the US EV market, accounting for about half of all sales. Cox Automotive data shows the automaker sold 242,100 units in H1 2026, down by 10.9 percent compared to the same period in 2025.

General Motors (NYSE:GM) brands Chevrolet and Cadillac took second and fifth place, respectively, in terms of best selling US brands. For the first half of the year, Chevrolet EV sales were down by 40.7 percent to 28,267 units, while Cadillac sales jumped 10.1 percent to 21,767 units.

Hyundai Motor's (KRX:005380,OTCPL:HYMTF) namesake brand ranks third at 26,936 units sold, down 5.4 percent for the period. Fourth place goes to Toyota Motor (NYSE:TM,TSE:7203), up an impressive 136.3 percent to 21,855 units.

What’s the EV market outlook for 2026?

More than 23 million new EVs, including battery and plug-in hybrids, are projected to hit the road this year, says BloombergNEF in its EV Outlook 2026 report. That’s up 11 percent year-on-year. EVs are set to account for 27 percent of unit sales in the overall global passenger vehicle market for the year.

Although global EV sales figures are growing at a slower pace in 2026 compared to the 20 percent growth experienced last year, head of battery raw materials at Fastmarkets, Paul Lusty stated during his firm’s June conference that the market’s “strong structural trajectory remains intact."

Despite China’s domestic EV market suffering from subsidy reforms, its EV exports are still surging and in turn driving growth in emerging markets. For example, BloomberNEF reports that Singapore and Thailand are seeing impressive growth as low-cost Chinese EVs make the transition away from ICE vehicles more affordable for consumers.

“As China's domestic EV sales have softened, it's certainly pivoted hard to exports, with exports roughly doubling this year in May relative to (2025),” Lusty told the audience.

“China isn't slowing production, it's very much just redirecting vehicles to receptive markets.

He added that even if China’s EV demand at home is lagging, downstream demand for battery metals such as lithium remains supported by demand for Chinese EVs abroad.

Looking over at the European market, Lusty sees “tighter emission standards” and the “recent oil price tailwinds” as highly supportive for wider EV adoption rates in the region for 2026.

For its part, EV Volumes is forecasting a 23 percent year-on-year growth rate for European EV sales at just shy of 5 million units or 32.2 percent of overall auto sales.

As for the US market, the firm expects EV sales to fall by 15.5 percent this year, to 1.3 million units. If this forecast bears out, EVs will only represent 8.2 percent of the overall auto market in the country.

This means that EVs will have lost market share in the US not only by 2025 levels (9.4 percent share), but also less than the 9.8 percent share captured in 2024.