The global automotive market is facing a difficult 2026, but electric vehicles are expected to buck the broader downturn.
According to EV Volumes, part of J.D. Power, global new light-vehicle sales are forecast to decline slightly year over year this year. Economic uncertainty, trade tensions, geopolitical instability and higher energy prices are all expected to weigh on the wider market.
Electric vehicles, however, are heading in the opposite direction.
EV Volumes forecasts combined battery-electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) sales to increase 7.8% in 2026, reaching approximately 23.3 million vehicles. EVs are expected to account for 25.7% of global light-vehicle sales, up 2.1 percentage points from the previous year.
BEVs Continue to Pull Ahead
The biggest growth is expected to come from fully electric vehicles.
Global BEV sales are forecast to rise 17.2% in 2026, giving battery-electric models an 18.5% share of all light-vehicle sales.
PHEVs are heading in the opposite direction. Sales are projected to fall 10.6%, reducing their market share to 7.2%. EV Volumes includes extended-range electric vehicles (EREVs) within its PHEV figures.
The longer-term outlook remains even stronger. Plug-in vehicle sales are expected to increase 13.5% in 2027, with double-digit growth forecast to continue through 2029.
By 2030, EVs could account for more than 40% of global light-vehicle sales. That share is projected to reach 61.3% in 2035 and 81.0% in 2040.
EV Sales Stagnated Early in 2026
The long-term outlook masks a weaker start to the year.
Between January and May 2026, global new EV deliveries totaled 7.5 million units, down 1.8% compared with the same period in 2025.
There are signs of a recovery, however. May marked the third consecutive month of EV sales growth after declines in January and February.
The market is also becoming increasingly divided between different powertrains and vehicle segments.
PHEV sales fell 18.1% during the first five months of the year, while BEV deliveries increased 6.7%. As a result, BEVs accounted for 71.4% of global EV sales during the period.
Electric SUVs Are Driving Growth
Electric SUVs remain one of the strongest parts of the global EV market.
SUV sales increased 8.0% year over year between January and May, pushing their share of the EV market to 59.5%.
Smaller B-segment SUVs were particularly successful, with sales soaring 59.0%.
Electric light-commercial vehicles also recorded impressive growth, increasing 43.0% during the first five months of 2026. Electric pickups climbed 11.5%, although LCVs and pickups remained relatively small portions of the overall EV market.
The picture was very different for conventional electric passenger-car segments. Deliveries across car segments fell 19.6%, while A-segment cars suffered a particularly severe 58.5% decline.
U.S. EV Sales Face a Major Setback
The United States is one of the clearest examples of the current divergence between global EV markets.
New EV sales in the U.S. fell 32.9% during the first five months of 2026, with 415,968 vehicles delivered.
BEVs represented 86.0% of those sales, although all-electric vehicle deliveries still declined 24.0%. PHEVs performed considerably worse, with sales plunging 61.1%.
Electric SUVs, which accounted for almost three-quarters of the U.S. plug-in market during the period, saw sales fall 33.8%.
EV Volumes expects the U.S. EV market to contract 15.5% for the full year, reaching around 1.3 million vehicles. EV market share is projected to fall to 8.2%, compared with 9.4% in 2025.
The outlook improves substantially from 2027 onward. U.S. EV sales are forecast to increase 15.6% next year, lifting EV market share to 9.3%. That share could reach 18.1% in 2030, 36.8% in 2035 and 56.2% in 2040.
Canada Is Moving in the Opposite Direction
Canada is showing considerably stronger momentum.
EV sales increased 5.3% year over year between January and May, reaching 78,512 vehicles. BEVs accounted for 80.4% of deliveries and grew 3.0%.
PHEVs were the stronger performer, with sales rising 16.2%.
For the full year, EV Volumes expects Canadian EV sales to increase 40.2%, giving EVs a 13.1% share of the country’s light-vehicle market.
The longer-term forecast is even more bullish, with EV market share expected to reach 24.1% in 2030, 42.5% in 2035 and 61.8% in 2040.
Europe Is Emerging as a Major EV Growth Engine
Europe is currently delivering some of the strongest EV growth in the world.
New EV sales across Western and Central Europe increased 29.7% between January and May 2026, reaching 1.9 million vehicles.
Both major plug-in powertrains contributed to the growth. BEV sales increased 30.7%, while PHEV deliveries climbed 27.7%.
Italy was the standout performer among Europe’s five largest EV markets, with sales surging 82.6%.
Growth is also spreading across vehicle segments. B-segment SUV sales jumped 152.9%, while A-segment car deliveries increased 197.3%.
EV Volumes expects European EV sales to grow 23.0% in 2026, reaching just under five million vehicles. That would give EVs a 32.2% share of the European light-vehicle market.
BEV sales are forecast to rise 25.0%, while PHEVs are expected to grow 18.7%.
European EV market share could reach 37.7% in 2027 and 43.9% in 2028 as new models, lower prices and tighter emissions requirements accelerate adoption.
Incentives Could Give Europe Another Boost
Government policy remains an important factor behind Europe’s EV growth.
Germany has reintroduced significant EV purchase subsidies, while Spain is preparing support through its Auto+ program.
Chinese automakers are also expanding their presence across Europe, particularly in price-sensitive markets such as Poland and the Baltic states. Competitive pricing and specifications are helping Chinese brands gain ground against established European manufacturers.
However, higher energy costs remain a potential threat. Rising oil prices could encourage EV adoption, but higher natural-gas prices could also push electricity costs higher and put additional pressure on national power grids.
Europe’s Automotive Rules Are Changing
The European Commission’s proposed Automotive Package could also reshape the EV market over the coming decade.
Under the proposal, automakers would need to reduce passenger-car tailpipe CO2 emissions by 90% from 2021 levels by 2035, rather than the previously planned 100% reduction.
The remaining 10% could be offset through measures involving low-carbon steel, e-fuels or biofuels.
This would potentially allow PHEVs, EREVs, hybrids and combustion-engine vehicles to remain available beyond 2035 alongside BEVs and hydrogen fuel-cell vehicles.
The proposal would also provide manufacturers with greater flexibility around the 2030 emissions target and introduce potential “super credits” for small, affordable EVs built in Europe.
A proposed €1.8 billion battery support package could further strengthen the European battery supply chain.
China’s EV Market Is Cooling
China remains the world’s largest EV market, but its growth is slowing.
EV Volumes has reduced its forecast for China’s overall light-vehicle sales to 25.3 million units in 2026, representing a 5.2% year-over-year decline.
EV sales are also expected to fall, with deliveries projected to decrease 3.9% this year. Even so, EVs would still represent an enormous 51.6% share of China’s light-vehicle market.
The weakness follows a sharp slowdown in the first five months of 2026, when EV deliveries fell 20.0% compared with the same period last year.
BEV sales declined 11.0%, while PHEV deliveries dropped a much steeper 34.5%.
BEVs are nevertheless expected to account for 70.2% of China’s EV sales in 2026, increasing to 82.0% by 2030.
China’s EV Industry Faces a Tougher Environment
China’s electric-car industry is entering a more mature and competitive phase.
Policy support is being reduced, while new efficiency and energy-consumption standards are placing greater pressure on automakers to improve vehicle performance.
Battery-recycling requirements and the gradual phase-out of some local vehicle trade-in incentives are also changing the competitive landscape.
Smaller and less efficient manufacturers could find it increasingly difficult to survive as China’s EV industry moves toward a more market-driven environment.
Despite the short-term slowdown, the long-term outlook remains enormous. EVs are forecast to represent 72.9% of China’s light-vehicle sales by 2030, rising to 85.7% in 2035 and 91.9% in 2040.
South Korea, Brazil and India Post Strong Growth
Not every EV market is experiencing a slowdown.
South Korea recorded a 110.6% increase in EV deliveries between January and May 2026. BEVs were responsible for much of the growth, with sales increasing 123.5%.
Brazil also recorded spectacular growth, with EV volumes rising 114.8% during the first five months of the year. BEV sales increased 181.4%.
India recorded an 86.5% increase in EV sales during the same period, with BEVs accounting for virtually the entire new EV market.
These markets demonstrate how quickly EV adoption can accelerate when more affordable models and favorable market conditions come together.
Australia’s EV Market Is Surging
Australia is another standout performer.
EV deliveries increased 99.5% year over year between January and May 2026, reaching 109,144 vehicles. May alone saw a 128.2% increase.
BEVs accounted for 65.2% of EV sales, with deliveries up 106.5%. PHEV sales increased 87.6%.
Electric SUVs dominated Australia’s EV market, accounting for 78.0% of sales during the first five months. Their deliveries increased 126.7%.
Smaller EVs are also beginning to gain traction. B-segment SUV sales jumped 892.3%, while B-segment car deliveries increased 696.3%, albeit from comparatively smaller volumes.
Australia’s Fringe Benefits Tax exemption is one factor supporting EV adoption. Eligible BEVs and fuel-cell vehicles can benefit from the exemption when acquired through arrangements such as salary packaging or novated leases, provided they meet the relevant price and eligibility requirements.
The Global EV Market Is Splitting Into Winners and Losers
The 2026 EV market is proving far more complicated than a simple global growth story.
The overall outlook remains positive, with global EV sales expected to increase 7.8% this year and surpass 40% of light-vehicle sales by 2030.
But growth is increasingly uneven.
Europe is accelerating rapidly, Canada is gaining momentum and countries such as South Korea, Brazil, India and Australia are recording spectacular increases. At the same time, the U.S. and China are experiencing significant short-term declines.
The most important trend may be the continued shift toward BEVs and electric SUVs. While PHEVs are losing ground in several major markets, battery-electric models are increasingly responsible for EV growth.
For automakers, the message is clear: demand for electric vehicles remains strong in many parts of the world, but success increasingly depends on pricing, vehicle segment, government policy and the ability to compete in a rapidly changing market.
The global EV transition is continuing—but its next phase is likely to be defined less by universal growth and more by which manufacturers and markets can adapt fastest.
