Electric Vehicle Forecast 2026: Global Growth, Policy Shifts, and Industry Outlook

Light vehicle sales worldwide are stabilizing after supply chain disruptions and post-pandemic recovery cycles. Global light vehicle sales are projected to remain strong, with an expected 1.7% year-over-year rise to 89.6 million units in 2025, though growth rates are moderating compared to earlier rebounds. Within that broader vehicle market, EV sales maintain a higher growth trajectory than internal combustion engine vehicles.

Battery electric vehicles account for the majority of new electric vehicle demand. Plug-in hybrids and hybrid vehicles continue to serve as transitional technologies in smaller markets where charging infrastructure is less mature. In many major markets, EV purchases now represent a meaningful share of total vehicle sales. Analysts predict that 2025 will be a pivotal year for EVs, with electrified vehicles potentially comprising up to 25% of new vehicle purchases.

Key performance indicators for the EV industry in 2026 include:

• Market share of battery electric vehicles within total passenger cars

• Growth in charging infrastructure deployment

• Battery cost per kilowatt hour

• Expansion of production capacity outside China

• Consumer total cost comparisons between EVs and ICE vehicles, including diesel, which remains a cost-effective fuel type in certain markets compared to petrol, BEV, and PHEV

These indicators suggest that while global EV expansion remains intact, the market is entering a consolidation phase in some regions and acceleration in others. The global EV market is expected to improve by 17% in 2025, despite challenges such as tariffs and slower consumer demand.

China Leads the Global EV Market

China continues to dominate the global EV market in 2026. The Chinese market represents the largest share of EV sales and production worldwide. China produces 71% of all EVs sold globally and accounts for approximately 60% of global sales.

Image courtesy of Eurasia Magazine

Chinese OEMs have strengthened their position both at home and abroad. Companies such as BYD have become global competitors, exporting electric cars into Europe, Southeast Asia, and Latin America. Their strategy centers on low-cost production, vertical integration in the battery industry, and aggressive pricing that undercuts many Western rivals.

China’s dominance is supported by strong governmental support, domestic battery manufacturing leadership, and a dense charging infrastructure network. The country’s early investment in electrification and infrastructure has reduced range anxiety for consumers and improved confidence in EV purchases.

At the same time, Chinese OEMs face rising tariffs and trade scrutiny in Europe and the United States. Policy changes in response to competitive pressures may slow expansion in certain markets, but the scale of the Chinese market ensures that global EV momentum remains heavily influenced by developments in China.

United States EV Market and Policy Shifts

The United States EV market in 2026 reflects both progress and uncertainty. EV adoption has expanded steadily in passenger cars and light commercial vehicles, but federal tax credits led to a sharp decline in U.S. EV sales during the fourth quarter of 2025.

The expiration of federal tax credits led to a sharp decline in U.S. EV sales during the fourth quarter of 2025.

Tax credits under recent federal legislation have encouraged EV purchases, yet eligibility rules tied to domestic production and battery sourcing have complicated consumer decisions. The incoming administration and political shifts following Donald Trump's policy proposals have introduced additional uncertainty around incentives, tariffs, and industrial strategy.

If tariffs on Chinese vehicles or battery components increase, prices for some electric car models could rise, affecting demand. The incoming U.S. administration is anticipated to introduce universal tariffs that could affect EV pricing and market dynamics. At the same time, domestic production incentives may strengthen local manufacturing capacity and reduce reliance on foreign supply chains.

The US vehicle market shows continued interest in EVs, but EV sales growth is sensitive to:

• Changes in federal tax credits

• State-level incentives

• Charging infrastructure expansion

• Fuel price volatility

• Consumer perceptions of total cost

U.S. market share for EVs in 2025 is estimated to be between 7.5% and 11%, and the electric share of light-vehicle sales in North America is expected to reach 12.8%.

Despite policy headwinds, EV adoption in the United States remains on an upward trajectory, especially as more affordable models enter the market and charging networks expand. The uncertainty surrounding U.S. EV policies is expected to create challenges for automakers in meeting electrification targets. The U.S. allocated $5 billion over five years for nationwide charging infrastructure expansion in 2025.

Europe Navigates a Transitional Phase

The European market presents a mixed picture in 2026. Europe has historically been a leader in electrification due to strict emissions standards and strong incentives. However, recent adjustments in subsidies and economic pressures have slowed growth in certain countries.

EV sales in Europe remain significant, particularly in Northern and Western Europe, but price sensitivity among consumers is increasing. Hybrid vehicles and plug-in hybrids continue to play a role in the transition, especially in markets where charging infrastructure coverage is uneven.

European automakers are accelerating electrification plans to comply with tightening emissions regulations. Many companies are phasing out internal combustion engine models entirely over the next decade. However, rising tariffs on Chinese imports and competition from lower-cost vehicles are reshaping the competitive landscape.

Key markets within Europe continue investing in infrastructure and battery production, but the region faces challenges in balancing affordability, competitiveness, and regulatory ambition.

EV Pricing and Total Cost in 2026

One of the most important factors shaping the electric vehicle forecast 2025 and extending into 2026 is affordability. The average electric car remains more expensive upfront than many ICE vehicles, although the gap is narrowing. In 2025, the average cost of an electric vehicle (EV) is projected to be $55,544, while the average cost of a gas-powered vehicle is $49,740, indicating a narrowing price gap between the two.

Battery prices have fallen significantly over the past decade, and further reductions in the battery industry are expected as production scales and energy density improve. Higher energy density allows manufacturers to deliver a longer range without proportionally increasing battery size or cost. Battery prices are projected to fall to about $80 per kWh by 2026, making electric vehicles more cost-competitive with internal combustion engine vehicles even without subsidies.

For consumers, the total cost comparison between electric vehicles and gas cars often favors electric vehicles over time. Factors influencing total cost include:

• Lower fuel costs compared to gasoline

• Reduced maintenance due to fewer moving parts

• Potential tax credits and incentives

• Lower exposure to oil price volatility

However, the upfront purchase price remains a barrier in smaller markets and among first EV buyers. As more companies introduce low-cost models with prices starting at more accessible points, broader segments of the population are expected to consider EV purchases. In 2025, the UK EV market is expected to become more affordable due to declining battery costs, government incentives, and increased manufacturing maturity. Research from the Green Finance Institute found that 27% of UK drivers who would not buy an EV cited cost as a major factor.

The growth of the used EV market also contributes to improved accessibility. Lease returns and fleet turnover are increasing supply, making electric vehicles more affordable for consumers who were previously priced out of the market. The second-hand EV market is growing rapidly, with record sales and steep price drops making EVs more affordable.

Charging Infrastructure and Range Confidence

Charging infrastructure remains central to sustained EV adoption. In 2026, expansion of public charging networks continues under programs such as the National Electric Vehicle Infrastructure initiative in the United States, complementing the broader growth in the number of EV charging stations by state. The national electric vehicle infrastructure program aims to build reliable, fast charging corridors across highways and urban centers.

Globally, charging infrastructure deployment is accelerating. Key markets are investing heavily in public and private charging to reduce range anxiety and improve user experience. Range improvements in new battery electric models also support consumer confidence, with many vehicles now offering competitive range compared to traditional ICE vehicles.

Home charging remains the primary solution for many EV owners. Level 2 charging installations are increasing, particularly in suburban and residential areas. This combination of public and private infrastructure strengthens the foundation of the global EV market.

Nonetheless, infrastructure challenges persist in rural areas and smaller markets. Grid capacity upgrades and standardized technology integration are ongoing requirements to support continued electrification.

Technological Advancements in Batteries and Vehicles

Technological advancements continue to drive progress in the EV industry. Improvements in battery chemistry, manufacturing processes, and software integration are enhancing performance and reducing costs.

Energy density remains a key focus of battery development. Higher energy density enables a longer range without increasing vehicle weight significantly. Manufacturers are also investing in improved thermal management systems to enhance safety and longevity.

The battery industry is expanding production capacity across North America and Europe to reduce reliance on China. However, Chinese companies maintain a leadership position in battery production scale and cost efficiency.

In addition to batteries, vehicle software, autonomous features, and connectivity systems are becoming differentiators. Companies are using technology to create distinct driving experiences and improve efficiency.

The shift from internal combustion engine vehicles to electric powertrains represents one of the most significant transformations in the auto industry. As production scales and costs decline, electrification is expected to dominate new vehicle launches over the next decade.

Competitive Landscape and Model Launches

Automakers worldwide are preparing new model launches in 2026. Passenger cars, SUVs, and light commercial vehicles are all receiving electric variants as companies respond to regulatory pressure and consumer demand.

Luxury & High-Performance Launches

• Jaguar Type 00: A radical, ultra-luxury grand tourer that previews Jaguar's shift to an all-electric, high-end brand. It aims for a range of up to 430 miles and can add 200 miles of charge in just 15 minutes.

• Ferrari EV: Ferrari’s first fully electric model is expected to debut in 2026. Prototypes currently testing in Italy suggest a crossover-style body (similar to the Purosangue) with a system that simulates a signature "Ferrari" engine sound.

• Chevrolet Corvette EV: Confirmed to use GM’s Ultium battery platform, this model marks the legendary nameplate's first move into pure electrification, targeting supercar-level acceleration.

• Cadillac Celestiq & Vistiq:

  • Celestiq: An extravagant, hand-built flagship sedan priced over $300,000.

  • Vistiq: A three-row luxury SUV designed to slot between the Lyriq and the Escalade IQ.

Major Brand & Fleet Updates

• BYD: The Chinese giant entered 2025 after a record-breaking 2024, where it delivered 4.27 million vehicles (a 41% increase), officially cementing its position as a global sales powerhouse.

• Audi A6 e-tron: Arriving with a sleek "Sportback" design, multiple powertrain options (including quattro AWD), and a range of approximately 350–390 miles (EPA).

• BMW iX3: The first model of the "Neue Klasse" era, featuring an 800V architecture that allows for 400kW charging and a completely new, minimalist design language.

• Alfa Romeo Stelvio EV: Launching on the STLA Large platform, this Italian SUV will feature an 800V system for ultra-fast charging and high-performance electric motors.

• Chrysler EV Crossover: Based on the Airflow concept, this crossover targets a 400-mile range and will debut the "STLA AutoDrive" system for Level 3 autonomous driving.

The Rivian R2 is one of the most highly-anticipated releases of 2026. Image courtesy of Car and Driver.

Luxury brands continue introducing high-performance electric cars, while mainstream brands focus on affordable, practical models. Chinese OEMs are particularly aggressive in entering international markets with competitively priced vehicles.

This competitive environment sees automakers gaining ground in the EV market through new launches and technological advancements. Consumers benefit from improved features, longer range, and falling prices. At the same time, it intensifies pressure on traditional automakers that have historically depended on ICE vehicles for profitability.

Electrification strategies now define corporate identity in the auto industry. Companies that fail to adapt risk losing market share in both domestic and global markets.

Challenges Facing the EV Industry in 2026

Despite growth, the EV industry faces several challenges:

• Tariffs affecting cross-border trade

• Policy changes under new administrations

• Supply chain constraints for critical minerals

• Consumer hesitation due to upfront cost

• Infrastructure gaps in certain regions

President Trump's previous administration emphasized domestic production and tariff measures, and similar approaches from an incoming administration could reshape trade flows and pricing structures. Governmental support remains crucial, but political shifts introduce uncertainty.

Range anxiety, though declining, still influences first EV buyers. Education, transparent cost comparisons, and visible infrastructure expansion are necessary to maintain momentum.

Additionally, fluctuations in battery raw material prices can affect vehicle pricing and profitability. The balance between scaling production and maintaining margins is a central challenge for companies across the EV market.

Conclusion and Future Outlook

In summary, the electric vehicle industry stands at the threshold of a new era, marked by rapid growth, technological innovation, and expanding global reach. As charging infrastructure becomes more robust and advanced, range anxiety is steadily diminishing, making EV adoption more appealing to a wider audience. The Chinese market, with its strong governmental support and aggressive investment by Chinese OEMs, is set to remain a driving force in the global EV market, influencing trends and setting benchmarks for the industry.

Governmental incentives and support will continue to play a pivotal role, especially in smaller markets where EV sales are growing rapidly but still face barriers related to affordability and infrastructure. The industry’s future will be shaped by ongoing advancements in battery technology, such as the development of solid-state batteries and faster charging systems, which promise to further enhance the performance and convenience of electric vehicles.

Looking ahead, the global EV market is expected to reach unprecedented heights, with new models, improved technology, and greater accessibility for consumers. Monitoring key performance indicators, such as market share, sales growth, production capacity, and infrastructure deployment, will be essential to understanding the industry’s progress and addressing potential challenges. With strong momentum, increasing consumer interest, and continued innovation, the future of the EV industry is bright, offering exciting opportunities for growth and transformation in global mobility.

FAQs

• What does the electric vehicle forecast 2025 suggest about 2026 growth?

  The electric vehicle forecast 2025 projected continued expansion of the global EV market, and 2026 follows that trajectory with moderated but steady growth. EV sales are expected to increase across major markets, particularly in China, while EV adoption in the United States and Europe depends more heavily on incentives, infrastructure, and policy stability.

• Are electric vehicles expected to outsell ICE vehicles in 2026?

  Globally, internal combustion engine vehicles still account for a larger share of total vehicle sales in 2026. However, in the Chinese market, battery electric vehicles are approaching or exceeding parity with ICE vehicles in certain segments. Market share gains for EVs are expected to continue as electrification expands.

• How important is charging infrastructure to EV adoption?

  Charging infrastructure is critical to sustained EV adoption. Programs such as the National Electric Vehicle Infrastructure initiative improve highway charging access and reduce range anxiety. Reliable home charging solutions also play a major role, as most EV owners charge overnight rather than relying exclusively on public fast chargers.

• Are EV prices expected to fall in 2026?

  Electric vehicle prices are gradually becoming more competitive as battery costs decline and production scales increase. Improvements in energy density and expansion of the battery industry contribute to lower manufacturing costs. However, tariffs and policy changes may influence final pricing in certain major markets.

• How do tax credits and incentives affect EV purchases?

  Tax credits and incentives significantly influence EV purchases, especially in the United States and Europe. Policy changes under an incoming administration could reshape eligibility and consumer demand. Governmental support remains a key driver of EV adoption, particularly for first EV buyers evaluating total cost.

• What role do Chinese OEMs play in the global EV market?

  Chinese OEMs play a central role in the global EV market. Companies such as BYD benefit from strong domestic production, advanced battery manufacturing, and competitive pricing. Their expansion into Europe and other key markets is reshaping global competition within the EV industry.

• Is 2026 a good year to buy an electric vehicle?

  For many consumers, 2026 offers improved technology, a better range, and expanding charging infrastructure. While upfront prices may still exceed some ICE vehicles, total cost advantages, incentives, and broader model availability make 2026 a strong year for EV adoption, especially for drivers with access to home charging.