BMI: Global EV Sales Reach 1.85 Million in July, Up 9 Percent

Regional divergence across major markets

European EV sales expanded 33 percent year-on-year in July to 450,000 units, pushing the region's year-to-date growth rate to 28 percent.

Despite a 17 percent month-on-month contraction, momentum remained intact across major national markets. France recorded an 81 percent year-on-year sales increase, while sales grew 46 percent in Germany and 43 percent in the UK.

In Spain, year-to-date sales rose 34 percent ahead of the August 4 launch of the government's new 'Auto+' program. The initiative provides base subsidies up to €4,500 (US$5,190) for passenger EVs, retroactively applicable to January 1, 2026, replacing the MOVES III scheme that expired at the end of 2025.

Conversely, North American EV sales fell 27 percent year-on-year in July to 140,000 units. The contraction follows the removal of US federal EV tax credits at the end of September 2025.

In Canada, regulators began allocating import permits under a bilateral quota agreement with China allowing up to 49,000 Chinese-made EVs annually at reduced tariff rates.

Authorities allocated more than half of the 24,500 permits available for the first six-month window by mid-August, including 2,400 permits issued during the first week of the month.

China’s domestic EV market contracted 5 percent year-on-year in July to 980,000 units, improving its year-to-date performance to -12 percent.

Despite lower absolute sales volumes compared to 2025, EV market penetration exceeded 50 percent across multiple months in 2026, up from 48 percent across the first seven months of 2025, as overall combustion vehicle sales dropped at a faster rate.

Chinese manufacturers also expanded international shipments, exporting a record 500,000 new energy vehicles in July.

Rare earth bottlenecks pressure supply chains

Despite the ongoing expansion of global EV manufacturing, structural supply constraints in rare earth permanent magnets continue to serve as a hurdle in domestic supply chains.

Securing processed rare earth elements outside China remains a primary operational risk. While raw deposits exist globally, Western industrial supply chains face technical and economic hurdles in processing and chemical separation.

"The problem is extracting them in an efficient, economic way," Adrián Godás Della Ripa, senior analyst at Fastmarkets, told the Investing News Network in a recent interview.

He noted that access to separated materials has superseded raw supply metrics, creating a bifurcated market structure where non-Chinese materials command a security premium over domestic Chinese spot prices.

"It is a question for the customers and buyers," Godás said. "We have this very cheap material from China, or we decide to pay a premium in a sense of security."

Downstream manufacturing of high-performance permanent magnets also presents additional technical hurdles due to intellectual property constraints.

Chemical separation remains a second major bottleneck, considering the technical complexity of rare earth separation.