Global electric vehicle demand is recovering, with strong European market offsetting weakness in China and the US.

Introduction

After a brief period of volatility, the global electric vehicle (EV) market showed signs of recovery in the second quarter of 2026. According to data released on July 10 by the consulting firm Benchmark Mineral Intelligence (BMI), global registrations of battery electric vehicles and plug-in hybrid electric vehicles reached 2 million units in June, a year-on-year increase of 7%, marking the fourth consecutive month of growth. However, regional performance diverged sharply: Europe set a historical record with a 31% year-on-year increase, while both the Chinese and U.S. markets experienced double-digit declines. This shift in landscape is reshaping the investment logic and competitive dynamics of the global EV supply chain.

Industry Background

Since 2025, the global EV market has entered an "adjustment period." In China, the largest single market, domestic competition intensified after the phase-out of subsidy policies, with local automakers accelerating their overseas expansion; in North America, after the expiration of federal tax credits at the end of 2025, EV demand cooled significantly; Europe, on the other hand, became the main engine of global EV growth thanks to strict carbon emission regulations and continuously expanding charging infrastructure. BMI data show that global EV registrations in the first half of 2026 were approximately 10.5 million units, a year-on-year increase of only 2%, a significant slowdown compared to the same period in 2025.

Key Developments

• Record Growth in Europe: European EV registrations reached approximately 530,000 units in June, surging 31% year-on-year. Key drivers include the certainty of the EU's 2035 ban on new internal combustion engine vehicles, purchase tax reductions for EVs in multiple countries, and affordable electric models launched by automakers such as Volkswagen and Stellantis. Germany, France, and the UK contributed the majority of Europe's growth.
• Sluggish Market in China: China's EV registrations in June were about 1 million units, down 11% year-on-year. Slowing domestic economic growth, significant price cuts on gasoline vehicles diverting demand, and lagging expansion of charging infrastructure in some cities suppressed consumer demand. In response, Chinese automakers such as BYD and SAIC are accelerating exports to Europe, Southeast Asia, and Latin America to absorb overcapacity.
• Pressure in the North American Market: North America (primarily the U.S.) saw EV registrations drop by 13% in June. After the expiration of federal EV tax credits at the end of 2025, the price competitiveness of most models plummeted sharply, with only a few brands like Tesla maintaining sales through price cuts. Some state-level subsidies have not fully taken over, and market recovery will depend on lower battery costs or new policy measures.

Industry Impact

Regional Restructuring Europe has become the core driver of global EV demand growth, which will continue to tilt battery and charging infrastructure investments toward Europe. The short-term weakness in China and North America may accelerate the regionalization of the supply chain: Chinese battery companies (such as CATL and BYD) are building factories in Hungary, Germany, and other locations to serve European automakers locally; North American automakers, meanwhile, will need to rely on joint venture battery plants with Korea's LG and Samsung SDI to reduce dependence on imported batteries.### Benefiting and Pressured Companies - European local automakers: Volkswagen, BMW, Stellantis, etc., benefit from strong demand in the local market, and their electric vehicle sales are expected to further increase. - Chinese automakers' overseas expansion: BYD, SAIC, etc., are gaining market share in Europe and Southeast Asia by building factories in Hungary, Thailand, etc., partially offsetting domestic decline. - Charging operators: Rising utilization of charging stations in Europe benefits operators like ChargePoint, Ionity, while the North American market may delay investment in ultra-fast charging networks due to weak demand. - Battery supply chain: Prices of raw materials like lithium and nickel are under pressure due to slowing demand in China, but European demand growth supports cobalt and high-nickel cathode materials; recycling business faces capacity utilization challenges due to short-term fluctuations in new car sales.

Policy and Trade Risks The trade dispute between China and the EU over electric vehicle anti-subsidy investigations continues, which may affect tariff costs for Chinese exports to Europe. If the US restores some EV tax incentives (such as provisions of the new Inflation Reduction Act), it could reverse North American demand, but the probability is low in the short term.

Challenges and Risks - China-US policy uncertainty: The absence of US federal subsidies causes consumer concerns; China's local protectionism and overcapacity may trigger price wars, compressing profits across the entire industry chain. - Charging infrastructure bottleneck: Despite rapid growth in Europe, the installation speed of charging stations in some countries still lags behind the growth of EV ownership, and long-distance travel anxiety may suppress medium-term demand. - Raw material cost volatility: Lithium prices stabilized in the first half of 2026 after a sharp drop in 2025, but geopolitical risks (such as Chile's mining reform, Congo's cobalt policy) may still disrupt the battery supply chain. - Intensified market competition: Competition between European local brands and Chinese BYD and Tesla is heating up, profit margins are generally under pressure, and whether automakers can continue to invest in R&D and technological innovation is key.

Future Outlook Looking ahead to the second half of 2026, Europe remains the main contributor to global EV demand growth, but the growth rate may slow due to base effects and high inflation. China is expected to gradually stabilize driven by local government trade-in subsidies and charging station deployment in rural areas. The North American market needs to wait for new national incentive measures possibly introduced in 2027, or the volume ramp-up of new models like the Tesla Cybertruck, to regain growth.

From the industry chain perspective, battery companies will accelerate the relocation of production capacity to Europe and North America to avoid trade barriers, while cost reductions in solid-state batteries and LFP batteries are becoming new variables driving EV adoption. Charging network operators must balance ultra-fast charging and destination charging deployment according to different regional demands.## Conclusion The global trend of transportation electrification has not reversed, but regional market divergence is reshaping the growth rhythm. Europe's rise proves that strong policy frameworks and infrastructure construction can effectively stimulate demand; while fluctuations in the Chinese and U.S. markets remind the industry that models relying solely on subsidies or monopoly giants are unsustainable. In the future, the global EV industry needs a more diversified market structure, a more resilient supply chain, and a more inclusive charging ecosystem to continue advancing the deep transformation of clean transportation.