One in four new cars sold worldwide was electric in 2025

The electric car market reached new highs in 2025, growing by 20% from 2024 to exceed 20 million sales, in line with expectations in the 2025 edition of the Global EV Outlook1. The sales share of electric cars in the overall car market increased to 25%. This marked the fifth consecutive year in which annual electric car sales increased by about 3.5 million, a trend that began in 2021 after the Covid‑19 pandemic. As a result, about 5% of the global car stock is now electrified, displacing 1.2 million barrels of oil per day in 2025.

In particular, 2025 saw a boost for battery electric cars. The share of battery electric cars in total electric car sales increased to 65%, reversing the trend seen in the 2 years prior. While 2024 saw a strong increase in extended-range electric vehicles (EREVs), this did not continue in 2025, dropping to less than 7% of total electric car sales, after rising to 7.5% in 20242.

Market developments varied across regions. In the People’s Republic of China (hereafter, “China”), growth slowed slightly partly as a result of its trade-in scheme being temporary halted, but the country still accounted for more than half of the global increase in electric car sales in 2025. Europe experienced an upswing in sales following a step change in the EU CO2 standards, with sales rising 30% to more than 4 million after having stagnated in 2024. In the United States, the sales share of electric cars remained relatively stable at just below 10%, despite several policy shifts, including the ending of tax credits, which resulted in sales falling significantly in the last quarter of the year. Meanwhile, outside of these major car markets, sales continued to expand rapidly.

In a growing number of countries, the electric car sales share has recently surpassed 10%, and in some cases, progress has been even faster than in the three largest EV markets. Some later-entry markets have seen rapid increases in electric car sales, thanks to the economies of scale and cost-competitiveness of Chinese-made electric cars. For example, Nepal has witnessed one of the largest increases in electric car sales shares since 2020, as imports of electric cars made in China increased significantly. More than half of the 2 million electric car sales outside of the three major markets in 2025 took place in countries across Latin America, the Asia Pacific and the Middle East that have now reached an electric car sales share of more than 10%.

Close to 55% of new cars sold in China were electric in 2025

More than 13 million electric cars were sold in China in 2025, maintaining its position as the world’s largest electric car market, accounting for six out of ten electric cars sold globally. Monthly electric car sales exceeded a 50% sales share in 11 out of 12 months of 2025 – up from only 5 months in 2024. This lifted the electric car sales share to almost 55%. As a result, an estimated 44 million electric cars were on Chinese roads at the end of 2025, representing around 13% of the total car stock, up from 1 in 10 in 2024.

Growth in electric car sales in China has been extremely rapid over the past five years: from 2020-24, the annual growth rate in electric cars exceeded 75% and the sales share increased by around 10 percentage points on average each year. By contrast, in 2025, electric car sales grew less than 20% and the sales share rose by only about 6 percentage points. However, China remains by far the largest electric car market and has one of the highest sales shares of any country.

Many of the electric car sales in 2025 benefited from the trade-in scheme that was introduced in April 2024 and renewed at the beginning of 2025, offering CNY 20 000 (Chinese Yuan renminbi) (USD 2 750)3 to consumers that replaced an older vehicle with a new electric car, and CNY 15 000 (USD 2 050) for replacement with a new conventional vehicle. In July 2025, the trade-in scheme was temporarily halted in several cities, causing electric car sales to dip by 10% compared to June. Despite this temporary pause, the scheme still attracted 11.5 million applications over the year, and by November 2025, nearly 60% of applications were for new energy vehicles.

The trade-in scheme was paused due to limited funding at the provincial level and increasing reports of “zero-mileage cars”, which are vehicles purchased new and immediately resold on the domestic or global usedcar market. This allows buyers to take advantage of subsidies and helps manufacturers meet production targets, but they also disrupt pricing for local dealerships4. There are no official statistics on the number of zero-mileage cars, but estimates suggest that roughly 2% of new conventional car sales in 2025 were for zero-mileage used cars, while for electric car sales this percentage may be slightly higher, at roughly 4%.

Electric car sales saw strong growth in Europe in 2025, thanks to policy support

Electric car sales increased by more than 30% in Europe in 2025, reversing the relative stagnation seen since 2022. Across the region, electric car sales numbered 1 million more in 2025 than in the previous year, reaching a total of 4.2 million, or 28% of all new cars sold. In the European Union, electric car sales totalled almost 3 million and the EV sales share reached just under 27%. Additionally, 24 of the 27 EU member states recorded an increase in electric car sales shares, compared with just 13 the previous year. In more than half of these countries, the sales share rose by more than 5 percentage points.

The increase in EU electric car sales was the result of policy design, notably the step change in the EU CO2 standards that came into effect in 2025, targeting an emissions reduction of 15% compared to 2021 levels5. Towards the end of 2025, the European Commission proposed the Automotive Package, aimed at further increasing regulatory flexibility for 2030 and 2035 while supporting EU industrial competitiveness by promoting vehicles that are made in the European Union as well as electrifying company fleets.

In Germany, the largest electric car market in Europe, electric car sales increased by 50% in 2025, to reach a record high of 850 000. This rebound was supported not only by preferential tax treatment for electric company cars, but also by the wider availability of more affordable models, which contributed to a fall in the average battery electric vehicle (BEV) price of around 6% in 2025. Around 30% of cars sold in Germany in 2025 were electric, just slightly below the 31% sales share achieved in 2022. In France, battery electric car sales increased by almost 15% in 2025 while PHEV sales decreased by 25%. As a result, the electric sales share remained similar to 2024 levels, representing around 25% of total car sales. Impressive sales growth in Italy (+65%), Poland (+125%) and Spain (+80%) was supported by the reintroduction or continuation of EV purchase subsidies in 2025.

In the United Kingdom, electric car sales increased by more than 25%, accounting for over 1 in 3 new cars sold in 2025 – a significant increase from 1 in 4 new cars in 2024. Nearly half a million electric car sales were battery electric, representing 23% of all new cars sold. This fell short of the target set under the Vehicle Emissions Trading Schemes, which aimed for zero-emission cars (battery electric and fuel cell) to reach 28% of new registrations in 2025. However, manufacturers were still able to comply with the targets by using the scheme’s flexibilities introduced in 2025, such as borrowing credits from future years and earning extra credits. To further support sales, in July 2025 the government introduced a new subsidy for eligible battery electric cars priced below GBP 37 000 (USD 47 400). More than one-quarter of battery electric car sales were eligible for this subsidy in 2025.

Norway remains the world’s leading electric car market in terms of sales shares, with about 97% of new car sales being electric in 2025. Nearly all of the 2025 electric car sales were battery electric and less than 2% plug-in hybrid, coming close to the country’s target of selling only zero-emission cars in 2025. Starting in 2026, the purchase tax exemption for battery electric cars will be tightened to only apply to those priced at NOK 300 000 (Norwegian kroner) (USD 28 000) or less, down from NOK 500 000 (USD 47 000), and will be phased out completely in 2028.

One of the fastest-growing electric car markets in Europe in 2025 was Türkiye, where sales more than doubled compared to 2024 to reach nearly 240 000. Electric cars represented over 20% of new car sales in 2025, up from just over 1% in 2022. As a result, Türkiye became the fourth-largest electric car market in Europe last year, following Germany, the United Kingdom and France. Sales have surged since 2023, partly driven by the reduced registration tax (ÖTV) for BEVs of just 10%, compared to 45-80% for conventional cars. By July 2025, the ÖTV for battery electric cars was raised to 25% for models meeting certain price criteria. Following this change, electric car sales dipped for a few months but rebounded in December to a similar level to in June (over 30 000). The upswing in sales was also supported by growing domestic electric car production: sales from Türkiye’s own pure-play EV manufacturer, Togg, rose 30% in 2025. However, Togg’s market share decreased from 30% to just over 15% as other brands entered the market. Furthermore, with the introduction of new models, the share of BEVs in electric car sales decreased from 90% to 80%, still significantly higher than the overall share of BEVs in European sales.

Across Europe, the share of BEVs in electric car sales has increased steadily over the past few years, supported by emission standards that favour zero‑emission vehicles, in particular the EU CO2 standards. The BEV share in electric car sales rose from 55% in 2020 to nearly 70% in 2025. As a result, Europe and China reached similar shares of BEVs in EVs in 2025, with Europe ending the year slightly higher.

Overall, electric cars now represent about 5% of the European car fleet. Norway leads, with more than one-third of the car stock being electric. Within the European Union, only Denmark has a stock share above 20%, reflecting the lag between rapid sales uptake and stock turnover.

In the United States, electric car sales fell sharply in the last quarter of 2025

Electric car sales in the United States in 2025 were slightly lower than in 2024, at around 1.5 million. This stagnation was the result of several policy shifts. At the beginning of 2025, Executive Order 14154 directed the government to end support for EVs, including measures related to financial incentives and fuel economy standards. In July 2025, the One Big Beautiful Bill Act (OBBBA) eliminated the financial penalties for non-compliance with existing fuel economy standards, providing carmakers less incentive to sell EVs in the United States. The OBBBA also terminated tax credits for new and used electric car purchases after September 2025. As a result, new electric car sales in the fourth quarter of 2025 were 45% lower than in the fourth quarter of 2024, offsetting the almost 15% increase in Q1-Q3 sales in 2025 compared to the same period the previous year. Some of the sales prior to the fourth quarter were made in anticipation of the end of the tax credits. Although electric cars made up only 6-7% of car sales in Q4 2025, they represented around 10% of sales across the full year, only slightly less than in 2024.

Emerging markets represent an increasing share of global electric car sales

Outside the three major electric car markets – China, Europe and the United States – electric car sales increased steadily to reach 2 million in 2025, compared to 1.3 million sold the previous year. This nearly 50% growth can mainly be attributed to increasing sales in emerging markets and developing economies (EMDEs) other than China.

Electric car sales in these economies increased by around 80% in 2025, to reach almost 1.2 million, a record high. Rapid sales growth in these markets has mainly been driven by the increasing availability of lower‑cost electric car models, many of which are imported from China (accounting for 60% of sales in EMDEs other than China). Several markets doubled in size compared to 2024, with Southeast Asia demonstrating the largest absolute increase in sales. The share of BEVs in electric car sales (80%) is higher than in major markets (65%), but this is not a uniform trend across emerging markets. In Southeast Asia, more than 90% of electric car sales are for BEVs, but the opposite trend can be seen in other countries, such as Brazil (45%) and Uzbekistan (33%), where BEVs represent a minority share of electric car sales.

Electric car sales took off in Korea in 2025, in contrast to several other advanced economies

Electric car sales in Korea grew by around 65% year‑on‑year to reach more than 200 000 in 2025, after years of hovering around 130 000. As a result, the sales share of electric cars reached double digits (11%) for the first time. The government helped support sales earlier in 2025 by bringing forward the release of purchase guidelines compared with previous years. In addition, at the start of 2026, the government raised its zero-emission vehicle deployment target, aiming for electric and fuel cell electric vehicles to account for 50% of new car sales by 2030, providing a clearer signal for manufacturers to expand production capacity.

In Japan, despite subsidy support, electric car sales momentum remained weak for the second year in a row in 2025, with volumes similar to 2024 levels (just above 100 000). Electric cars accounted for less than 3% of sales, while conventional hybrid electric vehicles (HEVs) accounted for around one-third of all car sales in 2025. This reflects the long-standing focus of Japanese automakers on hybrid technologies to reach fuel economy requirements. In addition, the high share of the population living in apartments with limited access to private parking, in combination with charging infrastructure constraints, are slowing sales.

In New Zealand, electric car sales stabilised in 2025 after a large drop in sales of 70% in 2024 after the removal of the Clean Car Discount. In Australia, electric car sales rose steadily in 2025, reaching around 15% of new car sales as a increasing share of PHEV sales supported growth.

In Canada, electric car sales in 2025 were more than 30% lower than in 2024, due in part to the ending of the iZEV rebate programme at the beginning of the year. This programme offered up to CAD 5 000 (Canadian dollars) (USD 3 500) for eligible BEVs, and CAD 2 500 (USD 1 750) for PHEVs. The sales share of electric cars decreased from nearly 17% in 2024 to 11% in 2025.

In Southeast Asia, electric car sales more than doubled in 2025

In 2025, Southeast Asia saw one of the world’s largest increases in electric car deployment, with sales more than doubling year-on-year to more than half a million. Across the region, electric cars represented close to one in five cars sold. However, trends were uneven: Viet Nam, Indonesia and Thailand led the EV sales growth in the region, supported by strong policy incentives, the expansion of domestic manufacturing and favourable trade conditions for imports, particularly from China. On the other hand, electric sales shares remained somewhat lower in Malaysia and the Philippines, despite growing rapidly.

Sales in Viet Nam more than doubled in 2025, promoting the country to Southeast Asia’s largest electric car market, with nearly 40% of new car sales being electric, above levels seen in most European countries. Policy support for electric car purchases has primarily been provided through registration fee exemptions for BEVs since 2022. The domestic EV maker VinFast has captured nearly the entire market, and its small affordable models have been key enablers of mass-market adoption. In 2025, the price-competitiveness of best-selling EV models VF3 and VF5 helped them outsell conventional rivals in similar size segments.

In 2025, electric car sales in Thailand increased by 70% from 2024 levels, reaching roughly 140 000, nearly one-quarter of total new car sales. As a result, the country represented the second-largest electric car market in the region. The EV3.5 scheme that came into force in January 2024 continued to boost adoption through purchase subsidies, excise tax breaks and import duty reliefs. In addition, the EV3.0 scheme drove an increase in Thai-made electric car sales, by requiring manufacturers to register their domestic electric car production before January 2026 in exchange for the import duty exemptions. Thai-made electric cars represented 20% of the market in 2025, up from about 5% the year before. Despite policy settings shifting to support domestic production, Chinese-made electric cars still represented three-quarters of the Thai market in 2025.

In Indonesia, electric car sales more than doubled in 2025, reaching 15% of new car sales. Key policy support measures were VAT and import duty exemptions for battery electric cars. In anticipation of the tariff exemption for battery electric car imports coming to an end in December 2025, manufacturers ramped up imports towards the end of the year, resulting in about half of 2025 sales taking place in the last quarter. About 75% of 2025 sales were imports from China, while the rest were cars produced domestically by Chinese carmakers (mostly by Wuling) – supported by a wide range of manufacturing incentives – and imports from neighbouring countries such as Viet Nam and Thailand. As industrial and trade policies shift the focus towards local production, the importance of imports in Indonesia’s electric car market is set to wane in 2026.

While electric car sales also doubled in Malaysia in 2025, uptake was lower than in other neighbouring markets, with the share of electric cars in new car sales standing at about 7%. Southeast Asia’s largest car market has been supporting electric car adoption primarily through excise tax and import duty exemptions, resulting in Chinese imports accounting for as much as 80% of the market in 2025. These exemptions ended at the end of 2025 but remain active for completely knockdown kit (CKD) imports until the end of 2027, to enable domestic assembly with cost-competitive imported parts6. Several domestic car makers, such as Proton and Perodua, have also started to add electric models to their line-ups. In 2025, Proton’s best-selling electric cars were the e.MAS 5 and e.MAS 7, which were among the most competitively priced electric models on the market, priced at only around 10% more than comparable conventional cars.

Electric car sales leapt up in the Philippines in 2025, reaching almost 10% of new car sales, up from a negligible level the year before. Similarly to other Southeast Asian countries, policy support in the Philippines takes the form of excise tax relief (introduced at the start of 2025) and import duty exemptions (introduced in 2024) for electric cars. As a reflection of this, Chinese imports, particularly from BYD, made up most of the country’s electric car sales in 2025. The importance of Chinese imports is set to continue in the near term, with the tariff exemption running until 2028.

Electric car sales in India remain modest but are starting to pick up

Despite being the second-largest car market in the Asia Pacific region, India’s electric car sales remained below levels seen in Viet Nam and Thailand. However, sales started to pick up in 2025, increasing 75% year-on-year to reach 165 000, representing nearly 4% of total car sales. Roughly 60% of electric car sales were produced in India by domestic automakers Tata and Mahindra. Mahindra introduced two new electric models in 2025, and saw electric car sales increase fivefold compared to 2024. Besides local automakers building up sales, more brands started to sell electric cars in India, with the number of electric models available increasing from 33 to 45 between 2024 and 2025.

Following the announcement by the Indian government in 2024 of the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), the final requirements were announced in June 2025. The SPMEPCI will allow selected automakers to import higher-priced CBUs at a minimum import value of USD 35 000 with a reduced import rate of 15%, compared with duties of up to 110% for non-eligible imports, for a period of five years. While several automakers expressed interest, decisions to participate were delayed in 2025, with companies citing uncertainty related to the ongoing European Union-India free trade agreement negotiations and Chinese restrictions on rare‑earth magnet exports, which raised concerns about meeting the scheme’s localisation requirements.

Brazil and Mexico were behind the 75% electric car sales growth observed in Latin America in 2025

Electric car sales growth accelerated across major markets in Latin America in 2025, to reach more than 350 000 cars – an increase of 75% compared to 2024. More than 75% of the region’s sales growth came from Brazil and Mexico, where PHEV sales, in particular, expanded rapidly. As a result, PHEVs represented close to 50% of electric car sales in Latin America in 2025, up from 40% the year before. Several smaller Latin American markets, such as Uruguay, Costa Rica and Colombia, also saw sales growth, mostly of battery electric cars, thanks to tax and import incentives.

Electric car sales in Brazil surged to 180 000, or 9% of all new car sales, up from 6.5% in 2024. Brazil is one of the few countries where more PHEVs are sold than BEVs; the share of PHEVs in EV sales has hovered between 60% and 50% over the past few years. Growth has been driven by reduced import tariffs for electric cars, which are being gradually reinstated. In 2025, just under 85% of all electric cars sold in Brazil were made in China, a slightly smaller share than in 2024. This can be attributed in part to the opening of a Great Wall Motors plant in Brazil, which produced just under 5% of electric cars sold in the country in 2025. In addition, BYD started operations of its new factory in Brazil in 2025. One of the models it will produce is the Song Pro, which is flex-fuel compatible, specifically tailored to the Brazilian market.

Electric car sales in Mexico tripled in 2025, with sales of plug-in hybrid electric cars increasing sevenfold. As a result, the share of electric car sales in total car sales topped 7% in 2025, up from around 2% in 2024. Imports from China increased significantly, with 85% of electric car sales in 2025 being imports from China, up from just over 60% in 2024, despite the reinstatement of import tariffs for electric cars in October 2024. BYD has announced plans for local production, but as of 2025 no large‑scale manufacturing had begun. Geely and BYD are currently among the bidders to take over a factory in the country from Nissan.

Aside from the major markets, many countries in Latin American and the Caribbean now have either import or purchase tax exemptions for EVs in place7. Uruguay has become one of the region’s front‑runners in switching to electric cars: Sales of electric cars more than doubled between 2024 and 2025, reaching 13 500 cars, or nearly 30% of total new car sales in the country. Uruguay’s market is strongly skewed toward BEVs rather than PHEVs, supported by government policies such as tax exemptions and subsidies. Furthermore, gasoline prices are much higher compared to other Latin American countries, further supporting the adoption of BEVs: in 2025 the average gasoline price was USD 2 per litre, 75% higher than in Brazil or Argentina.

Costa Rica reached an electric car sales share of 17% in 2025, up from 15% in 2024. Recent growth in Costa Rica has been partly due to tax exemptions for electric models, which are gradually being phased out between 2025 and 2035. Colombia also experienced a rapid increase in EV sales, supported by greater availability of cheaper Chinese models, tax exemptions, and sharply rising gasoline prices following the phase-out of fuel subsidies in 2023.

One of the only countries in Latin America with mandated fuel economy standards is Chile, through its Energy Efficiency Law which started to be implemented in 2024. As a result, the average fuel economy of new car sales has since improved by over 17% annually, largely due to electric car sales. Electric car sales quadrupled in Chile between 2023 and 2025, to represent roughly 4% of total car sales. In Argentina, electric car sales remained very limited, with fewer than 2 000 cars sold in 2025. However, the BEV segment expanded significantly, with sales more than doubling, thanks to the market launch of two new BYD models. In addition, in 2025 the city of Buenos Aires introduced incentives such as exemptions from licence plate fees and road tolls for electric and hybrid vehicles, applicable until mid‑2026, helping to gradually improve the attractiveness of electric mobility.

Eurasian and Middle East regions show continued growth

Electric car sales only began to pick up in the Eurasian region from 2023 onwards, rising from just a few hundred sales in 2022 to more than 60 000 in 2025. Uzbekistan accounted for nearly half of the region’s electric car sales in 2025, with electric cars reaching 8% of total car sales. Uzbekistan is also the main car assembler in the region and hosts an EV production plant owned by a joint venture between BYD and UzAuto Motors. Electric car sales also grew rapidly in Tajikistan and Kyrgyzstan. In 2025, these two countries represented more than 30% of electric car sales in the region. BYD accounted for around 80% of all electric cars sold in the region, including those supplied through the joint venture with UzAuto Motors. Nevertheless, around 95% of electric cars sold in the Caspian region in 2025 were produced in China.

Electric car sales in the Middle East reached around 75 000 in 2025, expanding by more than 40% year‑on‑year. The United Arab Emirates remained the region’s largest electric car market, accounting for almost 50% of sales, though its share of the regional market has declined from over 60% in 2023 as neighbouring markets have gained momentum. Sales have grown particularly quickly in Qatar and Saudi Arabia, which together now represent nearly 45% of regional demand. Market preferences have also shifted markedly in recent years. When electric car sales first began to scale in 2020, US‑manufactured Tesla models accounted for about half of all sales. Today, Tesla’s share has fallen to around 15%, while BYD – which entered the regional market in 2022 – has rapidly expanded to a 60% market share.

Adoption of new electric cars in Africa has been limited to a few countries to date

In the past two years, the electric car market in Africa increased from around 4 000 car sales in 2023 to about 25 000 in 2025, driven primarily by sales growing in Egypt (7 900), Morocco (5 500) and South Africa (3 800), which together accounted for nearly 70% of regional sales in 2025. However, Ethiopia, Mauritius, Rwanda and Nigeria have also seen progress in electric car uptake. In South Africa, electric car sales remained at less than 1% of new car sales in 2025, but PHEV sales saw a strong increase, resulting in PHEV sales accounting for more than 70% of total electric car sales.

The African car market is in large part reliant on used exports from car-producing countries such as Germany, Japan and the United States. It is estimated that around 60% of all annual additions to the car stock in Africa are imported used cars. Therefore, tracking new electric car registrations or sales may not accurately reflect adoption of EVs in Africa. Data on the electrification of used exported cars is limited and further complicated by exports of zero-mileage vehicles.

The number of new registrations or sales can also be difficult to track, as new sales and used imports are often not distinguished in country statistics. Estimates of sales for Ethiopia, in particular, vary widely. Cumulative retail sales of new electric cars between 2021 and 2025 amount to slightly over 2 000. However, the vehicle licensing authority reports a cumulative 15 000 electric cars sold between 2022 and 2024, and that approximately half of all new cars sold in 2024 were electric.

As in many other EMDEs, the share of electric car sales coming from Chinese automakers is increasing. In 2023, roughly 40% of electric car sales in Africa came from European automakers, while BYD held only a 4% market share. By 2025, BYD accounted for 35% of all electric cars sold in the region. There are, however, developments underway from domestic manufacturers, and Moroccan automaker Neo Motors started to sell its first electric model at the beginning of 2026.

Some 2 500 car models were available worldwide in 2025. Nearly 1 000 of these were electric cars, about 40% of the total, up from about 35% in 2024. Counting both battery electric and plug-in hybrid electric models, the number of electric car models has more than doubled in the past five years. In 2025, the number of electric car models available worldwide increased by slightly more than 25%, a larger increase than the just over 15% seen in 2024. Hybrid model availability also continued to expand, rising by over 10% year-on-year to more than 200 models in 2025. By contrast, the number of internal combustion engine (ICE) car models remained constant in 2025 – the only powertrain category to do so.

The total number of electric car models could exceed 1 100 in 2026, based on recent original equipment manufacturer (OEM) announcements, growing at around 15% compared to the previous year. BEVs continue to account for around 65% of all electric car models, a share that has remained broadly stable since 2015. Looking forward, the share of PHEVs in total electric car models is expected to decline from around 35% in 2026 to around 30% by the end of the decade.

Around 150 new electric models have been announced for release in 2026, followed by approximately 70 in 2027 and 40 in 2028. Looking further ahead, seven models have already been announced for 2029. In aggregate, announcements suggest that electric model availability in 2029 will be over 25% higher than in 2025. Extrapolating historic trends, hybrid model availability could increase by around 30% to 2029, while ICEV model availability plateaus. As a result, the number of announced electric models around the world would be nearly 25% lower than the number of conventional models in 2029. However, this varies by region, reflecting differences in market structure, policy contexts and overall OEM strategies. While early announcements of new electric models point to continued build-up of EV model pipelines for some OEMs, others are putting more emphasis on alternative options, for example by prioritising hybrids.

Globally, SUV model availability has expanded steadily and now represents the largest segment, accounting for around half of all available electric models in 2025. As a result, large vehicles including SUVs accounted for almost 70% of all models available in 2025, up from around 55% in 2020. In contrast, small cars represented only around 10%.

In China, growth in the number of electric car models, especially large models, was the main driver of an expansion in car model availability last year. The total number of available car models increased by around 10% in 2025 to more than 1 100, while the number of electric models increased around 25%. As of the end of 2025, there were nearly 700 electric car models available, 60% more than the number of conventional car models. Among major global automotive markets, such as China, Europe, the United States and Japan, China is the only market with more electric than conventional models, reflecting that competition among Chinese OEMs is increasingly focused on EVs. Despite the number of large and SUV EV models growing over 25% in 2025 in China, their share of total electric car sales only increased by one percentage point, to reach more than 60%, although 2025 sales were 25 percentage points higher than 2020 levels.

Among the three major electric car markets, Europe recorded the fastest growth in electric car model availability in 2025. The total number of electric car models increased by nearly 35%, reflecting an uptick in model launches ahead of the introduction of the more stringent 2025 EU CO2 target. At the same time, Europe continued to have the highest number of conventional car models available, with 580 ICE models and nearly 100 hybrid models in 2025. Large cars and SUVs accounted for almost three-quarters of EV and conventional vehicle models in 2025. However, the availability of small EVs in Europe has improved significantly in recent years and is set to expand further in response to upcoming EU policy developments.

The United States has the highest share of large models within its EV line-up: over 85% of electric models are large cars or SUVs, compared with roughly three-quarters in Europe and China. This is also reflected in sales, with large cars and SUVs accounting for over 80% of all car sales in the United States. Among all available car models in 2025, ICE models accounted for about 60%, electric for nearly 30%, and hybrid around 10%. Compared to 2024, model availability across ICEs, EVs and HEVs remained broadly unchanged in 2025. This follows recent policy changes and past uncertainty around fuel economy and emissions standards.

Just five models represent around 20% of global battery electric car sales

While model availability shapes consumer choice, greater availability is not necessary reflected in EV purchase decisions; instead, buyers often tend to pick one of a relatively small number of very popular models. In 2025, 630 battery electric car models were available globally, yet sales remained highly concentrated across a small group of best-selling models. In 2025, just five models accounted for about 20% of global battery electric car sales: the Tesla Model Y made up nearly 8% of total battery electric car sales, followed by the Tesla Model 3 (3.6%), Geely Geome Xingyuan (3.5%), Wuling HongGuang Mini (3.1%), and BYD Seagull (3.0%). As a result, just 1% of available BEV models captured one-fifth of the entire global market. The top-selling 35 models accounted for around half of global battery electric car sales. Nevertheless, as EV adoption grows, automakers tend to offer a greater range of electric car models, which leads to a diversification of consumer choice. As recently as 2020, only two models accounted for about 20% of global battery electric car sales.

Sales are also concentrated in terms of where their manufacturers are headquartered. Chinese manufacturers accounted for more than half of the total BEV models available, and of global BEV sales in 2025. Manufacturers headquartered in Europe accounted for nearly one-fifth of models sold, followed by those based in United States, which made up nearly 10%

Vehicle range remains one of the key considerations for potential electric car buyers. The average battery electric car range is currently almost 380 km, and this has plateaued in recent years. The average range of small and medium-sized cars increased by about 7% and 5% in 2025, but global electric car sales have become increasingly concentrated in larger segments, with large cars and SUVs accounting for almost 70% of the global EV market in 2025. Sales-weighted battery electric car range rose by roughly 10% between 2020 and 2025. At the same time, public charging infrastructure has expanded rapidly, including along long-distance corridors, helping to reduce range anxiety.

As electric car markets partially shifted from high-income early adopters to include a wider range of consumers, including those with lower incomes, the greater availability of affordable, shorter-range models in electric car sales contributed to the plateauing of global average driving ranges. This may indicate a consumer or carmaker preference to balance range with overall vehicle costs.

Extending vehicle range by increasing battery capacity involves trade-offs. Larger battery packs can increase vehicle weight, partly offsetting gains in range, and cost. As charging infrastructure expands and fast-charging battery capabilities improve, incremental increases in battery size yield diminishing returns.

Today’s average range can accommodate the vast majority of daily driving needs

In many markets, average daily driving distances are around 40 km8, equivalent to roughly one-tenth of the average battery electric car range. Daily driving needs are higher in some markets – for example, the average daily driving distance in the United States is around 65 km. Even for more intensive use cases, battery electric car ranges are sufficient for daily needs. Taxi drivers’ typical distances, which average between 150 and 250 km per day, are roughly half of the average battery electric car driving range.

There is a clear relationship between battery electric car price and driving range. Lower-priced models generally have smaller batteries and thus offer shorter ranges, while longer-range vehicles tend to sit at the higher end of the price spectrum. Nevertheless, cost is not purely range-driven, as other features increasingly shape model positioning. In recent years, carmakers have also focused on software capabilities, charging speed and autonomous driving functions to attract new consumers.

The upfront price of electric cars compared to their internal combustion engine (ICE) equivalents remains a barrier to wider adoption. Over the past decade, declining battery manufacturing costs and the introduction of new affordable models mean the price-competitiveness of electric cars has made significant strides. However, the shift towards larger batteries and larger vehicle segments in many markets over the past 5 years has limited the impact of these cost reductions on purchase prices.

In 2025, the sales-weighted average purchase price9 of electric cars declined across almost all segments across the three markets covered in this section – the People’s Republic of China (hereafter, “China”), Germany and the United States. Across all three, a decrease in battery cell prices and manufacturers’ pricing strategies contributed to cost declines, although new model entries in each market had differing effects on average battery electric vehicle (BEV) prices.

In China, while prices fell within most segments, the introduction of new models put upward pressure on average BEV prices, as many of these were SUVs. The rising share of SUVs and increasing average battery sizes would have led to a roughly 3% increase in prices, but this effect was more than offset by declining battery cell prices, as well as non-battery component cost declines and carmakers’ aggressive pricing strategies in the increasingly competitive electric vehicle (EV) market. The overall result was a net drop of more than 10% in average BEV prices in 2025.

In Germany, the introduction of new affordable models brought down the average BEV price in 2025, even though the price of medium-sized models actually rose. New affordable models and battery cost declines together reduced the average BEV price by around 5%, with pricing strategies and other factors bringing the total year-on-year decrease to about 6%.

In the United States, the average retail price of a battery electric car fell nearly 2% in 2025. Most of the price decline can be explained by battery price reductions, while the remainder was driven by pricing strategies and non-battery manufacturing cost changes.

Progress in electric car affordability is also reflected in the distribution of base model prices relative to ICE vehicles. In China, around 30% of battery electric car models had an entry-level price below USD 20 000 in 2025. While still almost 10 percentage points lower than the share of ICE cars below this threshold, this marked a more than 5-percentage-point increase from the previous year. In Europe, affordability gaps remain wider: In 2025, about 25% of ICE models were priced below USD 30 000 compared with less than 10% of battery electric models (a small increase on the roughly 5% in 2024). In the United States, limited availability of lower-cost models continues to weigh on EV price-competitiveness. In both 2024 and 2025, less than 20% of available electric car models had a base trim price tag below the median price paid for an ICE car (approximately USD 40 000), compared with more than 40% of ICE models.

In China, the price-competitiveness of electric cars made major progress in all segments. Most noticeably, the affordability of small electric models displaced essentially all ICE alternatives in the small-sized car market in 2025.

Medium-sized cars, accounting for nearly 30% of new car sales, remained the most difficult segment to electrify. Their diverse uses, from daily commuting to longer-distance travel, limit opportunities for cost reductions through smaller batteries, while their market positioning constrains the ability to justify higher price premiums, unlike larger SUVs. Despite this, their relative affordability improved significantly in 2025, with the average price premium paid for a battery electric model falling below 15%, down from about 20% the previous year. As a result, electric models exceeded a 40% sales share in this segment, although this remained the lowest adoption rate across all car sizes in China.

In the SUV segment, which accounted for almost half of all car sales in 2025, BEVs reached price parity with ICE models for the first time. Plug-in hybrid SUVs remained cheaper than their ICE equivalents, although extended-range electric SUVs continued to sell at a roughly 60% premium, reflecting their higher-end positioning. Improved price-competitiveness contributed to rapid electrification in this segment, with adoption rates over 55% in 2025, albeit contributing to the shift of Chinese electric cars towards larger and heavier vehicles.

Looking ahead, intense price competition in China’s electric car market is likely to persist. In 2026, tighter policy support – including reduced purchase tax exemptions and stricter trade-in incentives – is expected to increase price pressure on carmakers. However, in most cases, affordability is no longer dependent on policy support: in 2025, even before government incentives, nearly 70% of BEVs sold in China were already cheaper than their ICE equivalents, up from around 50% in 2021.

In Europe, affordability remains the most cited barrier to wider adoption: A 2025 survey of 3 000 EU citizens revealed that many consumers would not be willing to pay more for a BEV than a comparable ICE model. While fewer than 10% of available BEV models in Europe were priced under EUR 30 000, the survey highlighted a willingness-to-pay a median price of around EUR 20 000.

The affordability of electric models made substantial progress in Europe in 2025, with the average price of battery electric cars decreasing for the first time following years of increases. The EU CO2 standards’ 2025 target pushed carmakers to introduce more affordable models to the market, such as the Renault 5 E-Tech, the Hyundai Inster, Tesla’s Model 3 and Model Y (with standard trims), and new Chinese models hit the European market. As a result, in Germany and the United Kingdom, the larger range of model and trim offerings explained about one-third of the year-on-year price decline observed in 2025. The remainder can be explained by the decrease in battery prices and other factors such as original equipment makers (OEMs)’ pricing strategies. However, this price drop would have been more pronounced had there not been a concurrent shift to larger and heavier models. In 2025, the average retail price of battery electric cars would have been roughly 20% lower in Germany and more than 5% lower in the United Kingdom without the increasing transition to SUVs and larger models that has taken place since 2021.

In Germany, the average price premium for small battery electric cars declined markedly in 2025, falling to around 20%, down from the 50% premium observed between 2021 and 2025. Strong sales of existing models such as the Fiat 500, alongside new, more affordable entries like the Renault 5 E-Tech, Leapmotor T03 and the BYD Dolphin, supported the first increase in electric car sales shares within the small segment since 2021, although the 2025 share was still lower than levels seen 3 years earlier, at less than 15%.

In contrast, medium-sized BEVs were sold at an average premium of around 15% relative to medium-sized ICE models, more than 5 percentage points higher than in 2024, making this segment comparatively less competitive.

In the SUV segment, which represented over 35% of total car sales in 2025, BEV price-competitiveness improved noticeably. The average price premium declined to around 10%, down from about 20% the previous year.

Overall, battery electric SUVs and small cars were the main contributors to improved affordability in 2025. Across all segments, the average BEV price premium declined for the first time since 2021 to around 20%, although remained higher than 2021 levels. At the same time, the share of BEVs sold below the average price tag of their ICE equivalents surpassed 30% in 2025, up from about 15% in 2021. This highlights significant within-segment affordability gains, partly offset by a continued shift towards larger, more expensive electric car segments.

In the United States, SUVs represented more than three-quarters of both new ICE and new electric car sales in 2025, highlighting the importance of this segment for the average price-competitiveness of electric cars.

Following the end of federal EV tax credits in October 2025, Tesla rolled out lower-priced “standard” trims of the Model Y and Model 3, contributing to the modest progress in the average price-competitiveness seen in 2025. A number of other carmakers followed suit and slashed the prices of their existing electric models. In 2025, there were nearly 20 models with entry-level prices below USD 40 000, compared to fewer than 15 the year before.

In 2025, the price premium paid for a battery electric SUV stood under 25%, a nearly 5 percentage point decrease from the previous year. As a result, more than 30% of battery electric SUV sales undercut the average ICE SUV in 2025, up from 20% the year before and less than 10% in 2021. Looking forward, as reflected in Hyundai’s significant discounts in early 2026, price cuts to mass-market electric models are likely to continue in 2026 in the absence of the federal EV tax credit to reduce EV price premiums.

In Southeast Asia, affordability improved with Chinese imports, but localisation will test cost-competitiveness

The affordability of electric cars in Southeast Asia continued to improve in 2025. In Indonesia, the average price premium of electric cars declined from 55% in 2024 to around 40% in 2025. This was primarily driven by the growing sales share of Chinese models – mostly imported from China and, to a lesser extent, from Thailand. Chinese models accounted for over 75% of electric car sales in Indonesia in 2025, up by around 20 percentage points from the previous year. The sales-weighted average price of Chinese battery electric cars was around 40% higher than the average price of ICE cars sold in 2025, in line with the overall average price premium. Other manufacturers also contributed to improving affordability. Imports of VinFast electric cars from Viet Nam represented over 10% of sales and were priced, on average, about 15% lower than ICE cars in Indonesia. In the coming years, as Indonesia’s policy framework shifts towards greater localisation – particularly following the expiry of import duty waivers in December 2025 – maintaining affordability gains will depend on whether the carmakers who invested in establishing local manufacturing facilities, such as BYD, Geely, Great Wall Motor and VinFast, can maintain their cost-competitiveness.

In Thailand, purchase price parity between battery electric and ICE models was already achieved in 2024. In 2025, as planned under the EV3.5 policy, EV import duty waivers expired, and foreign carmakers were required to ramp up local production to remain eligible for incentives. As a result, the share of Chinese-made EV imports in total electric car sales declined for the first time, falling from 80% to 75% year-on-year. This was partly offset by Chinese manufacturers increasing output from their local assembly plants. BYD, for example, shifted the production of Thailand’s best-selling BEV model, the Dolphin (accounting for 10% of BEV sales in 2025) from China to its Thai facilities. Notably, the list price of the Dolphin fell from THB 700 000 (Thai baht) (around USD 20 000) in 2024 when primarily imported from China, to roughly THB 640 000 (less than USD 18 500) in 2025.

In Malaysia, electric cars remained significantly more expensive than conventional models in 2025, with average prices roughly twice as high. This reflects the earlier stage of EV market development in the country, with the sales share at about 7%, compared with neighbouring countries such as Thailand and Indonesia. Chinese models, which accounted for nearly 80% of EV sales, were priced at an average premium of around 65% relative to conventional cars, higher than the average price premium seen in Indonesia. More affordable options were primarily offered by domestic manufacturers. In 2025, mass-market models from Malaysia’s Proton, the e.MAS5 and e.MAS7, sold at a premium of only around 10%, making them some of the most price-competitive EVs in the market, although they are essentially rebadged models from Geely assembled in China. As in Indonesia and Thailand, the expiry of import duty waivers is expected to put upward pressure on prices. In response, Proton and a handful of Chinese carmakers announced plans to localise production through completely knockdown kit (CKD) imports, which benefit from import duty exemptions. Expanding mass-market model offerings, both from domestic manufacturers and Chinese OEMs ramping up local assembly, will be key to improving affordability and supporting wider EV adoption in the country.

In Latin America, imports helped narrow price gaps but new tariffs may reverse gains

In Mexico, the price-competitiveness of both battery electric and plug-in hybrid cars made remarkable progress in 2025, primarily driven by increased Chinese imports. Chinese-made model sales soared in 2025, accounting for over 80% and over 90% of battery electric and plug-in hybrid electric car sales, respectively. As a result, battery electric cars were almost priced on par with conventional models in 2025, and Chinese models retailed 10% cheaper than the average ICE car in Mexico. Similarly, the price premium of plug-in hybrid electric cars – representing nearly 60% of electric car sales in 2025 – stood around 15%, marking a roughly 70 percentage point decrease from 2024. Capturing over 70% of the EV market, BYD was the most popular EV maker in the country, offering the most affordable options in its line-up. However, recent trade policy developments may reverse affordability gains. In December 2025, the Mexican Senate approved new tariffs – coming into effect from January 1, 2026 – on the import of certain goods, including cars (for which tariffs are set to 50%), from countries that do not have a free-trade agreement with Mexico, including China.

In Brazil, the affordability of electric cars improved markedly. In 2025, the price premium for battery electric cars halved from its 2024 level, reaching just under 15%, while the premium for plug-in hybrid models – representing over 55% of electric car sales – declined by more than 15 percentage points to around 85%. This progress was largely driven by affordable Chinese imports. Chinese-made models accounted for over 90% of battery electric car sales and nearly 80% of plug-in hybrid sales. On average, Chinese battery electric models were priced slightly below ICE cars, while plug-in hybrids remained about 50% more expensive. As import duties are gradually reinstated on both completely built (CBU) and CKD units, sustaining these affordability levels will depend on whether local production, particularly from BYD’s and Great Wall Motor’s assembly plants, can replicate the cost-competitiveness of previously imported models.

In Türkiye, tax incentives, low-cost imports and competitive local production brought affordability gains

In Türkiye, a combination of affordable imports and growing domestic production drove down electric car prices, further supported by reduced registration tax (ÖTV) rates for electric cars (embedded in this section’s car price data). In 2025, the average price premium for battery electric cars in Türkiye fell from over 30% in 2024 to around 10%. Chinese models, priced on average about 15% below ICE cars, accounted for roughly 10% of BEV sales. Models from domestic EV maker Togg were even more price competitive, at an average of 20% cheaper than conventional cars, helping Togg to capture more than one-fifth of the BEV market. Price-competitive imports from other countries in Europe also contributed to improving BEV affordability. Plug-in hybrids saw significant progress, with their price premium declining from over 140% in 2024 to around 35% in 2025. For this powertrain technology, affordable imports from China were the main driver of price reductions, accounting for nearly three-quarters of sales and priced, on average, about 10% below conventional cars. However, recent trade policy developments are set to put additional pressure on the affordability of imported electric cars. In September 2025, the Turkish government introduced additional duties of 30% on electric car imports from countries outside the European Union, extending earlier China-specific tariffs of 40% introduced in 2024.

The most common way to buy a car is second-hand

Second‑hand markets play a central role in enabling mass‑market adoption of electric cars. Most people do not buy new cars; instead, they buy used cars because upfront costs are lower, making car ownership more affordable. For example, across Europe around eight in ten people purchase their car second‑hand, and this share rises to roughly nine in ten among low‑ and middle‑income households.

Besides increasing affordability for individual owners, the second-hand car market is important for fleet operators and leasing companies, which purchase large volumes of new cars and rely on stable residual values to manage costs and risks. In general, the price of a lease is designed to account for the depreciation of a vehicle over the typical 3-year lease period. Predictable resale values for electric cars, on par with those of conventional cars, help stimulate new electric car registrations, support fleet turnover, and increase the supply of affordable used vehicles entering the market following their first lease.

Over the past few years, the share of electric cars in the second‑hand market has grown steadily across major regions. Across China, five key European markets (France, Germany, Italy, Spain and United Kingdom) and the United States, sales of used electric cars surpassed 3 million in 2025, an increase of around 35% compared with 2024.

Resale values in China are taking a hit from new, cheaper models

With around 13% of China’s car fleet now electric, the second‑hand market is also becoming increasingly electrified. In 2025, sales of used electric cars exceeded 1.5 million, around 8% of all used car sales, reflecting strong new car uptake in recent years and large numbers of electric cars cycling out of initial ownership for the first time. Turnover was also supported by the scrappage and trade-in scheme, in which a subsidy of up to CNY 15 000 (Yuan renminbi) (USD 2 000) is provided if a new electric car is bought to replace an older car, CNY 2 000 (USD 275) more than the subsidy received when buying a new conventional car.

In 2024, the levels of electric car resale value retention were lower than the overall levels in China – about 46% for 3‑year‑old electric cars, compared to around 55% across the broader used car market. By late 2025, average BEV and PHEV resale values had fallen to 42%, a similar percentage point decrease as in the overall used car market, where levels declined to just above 50%. There are several reasons for the difference in depreciation rates between electric and ICE cars in China. Rapid advances in battery technology have quickly made newer electric models far more attractive, accelerating the depreciation of older electric cars. While electric cars generally require less routine maintenance than conventional cars, concerns about battery health and the potential cost of major repairs make the purchase of an older electric car less appealing. So much so that it is estimated that around 80% of used car dealers in China now refuse to accept BEVs that are more than 5 years old.

In Europe, resale values for battery electric cars have decreased since 2022 as supply and demand balanced out

In Europe, only around four in ten of all new car registrations are made by private buyers, while the majority are purchased by company fleets, dealerships or short-term rental firms. As the share of private buyers has steadily declined over the past decade, the choices made by corporate fleets have become increasingly influential, shaping the pace and direction of Europe’s fleet build‑up. Across the five European markets analysed – France, Germany, Italy, Spain and the United Kingdom – electric cars represented roughly 4% of used car transactions in 2025, increasing from only 1% in 2021.

Market conditions differ across countries. The United Kingdom remains the largest overall second‑hand market among the five, with sales of nearly 8 million used cars in 2025. Meanwhile, Germany recorded the highest sales of used electric cars by volume – around 400 000 – in 2025, corresponding to a little over 6% of the country’s used car market.

In 2022, tight supply of used cars lifted resale values across all powertrains in the five European countries analysed. As supply and demand have since rebalanced, overall value retention has declined. However, the value retention of BEVs has weakened more noticeably. Across the five markets, battery electric car retention rates fell from a peak of about 50% in 2022 to 35% in 2025, compared with the overall market’s drop from around 60% to 50%. PHEVs show a similar pattern: While PHEVs were broadly aligned with average resale values in 2022, their performance began to diverge from 2023 onwards. The steepest decline was observed in Germany, where PHEV retention rates matched that of the overall market in 2022 but fell to an average of 45% by the end of 2025, around four percentage points below the market average.

US second-hand electric car market remains volatile

The United States remains the smallest used electric car market among the regions analysed, with less than 400 000 electric car transactions in 2025, representing roughly 2.5% of all used car sales. Despite the market’s limited size, activity accelerated last year, as 2025 marked the final year of eligibility for federal tax rebates on second‑hand EVs (see below), contributing to a 30% increase in used EV sales compared with 2024. Tesla continued to dominate the segment, securing three of the top five positions in the ranking of used EV models sold in the United States. About 40% of used EVs sold for under USD 25 000, significantly less than a new electric car in the United States (see above), with a used Nissan Leaf remaining one of the most accessible models, priced at about USD 12 000.

Resale values in the United States have been highly volatile compared with other major markets. In 2022, BEV resale values outperformed the overall used car market, reflecting the limited availability of electric models at the time. This trend reversed sharply in 2023 following Tesla’s price cuts for new cars, which rapidly eroded used EV pricing. By mid-2025, BEV resale values had fallen further amid a rush to capitalise on the expiring tax incentives for second‑hand cars, which provided a tax rebate of USD 4 000 for used vehicles priced below USD 25 000. In contrast, overall used car prices increased, driven in part by tariff‑related cost pressures. As a result, BEV resale values ended 2025 roughly 25 percentage points below the overall market.

Policies and business models that strengthen the value retention of electric cars can play a direct role in improving the value proposition of new electric cars and accelerate mass‑market adoption of EVs. Strong value retention reduces ownership risk for private buyers and gives fleet operators more confidence to purchase new electric cars, since predictable residual values make leasing and financing more cost effective.

Some companies are already experimenting with measures to stabilise or guarantee used EV values. For example, VinFast has introduced a Residual Value Guarantee in the Philippines, promising to buy back its electric models for up to 90% of the original price after six months and 70% by the third year of use. Similarly, Hyundai began guaranteeing a residual value of up to 55% back in 2024 for electric cars, and announced a similar programme for fuel cell electric cars in 2025.

In addition, there are several examples of governments subsidising used electric car sales. In 2025, five European countries had some form of incentives available for used electric cars: Belgium, Iceland, Lithuania, Luxembourg and Sweden. Until the end of 2024, the Netherlands offered EUR 2 000 (USD 2 150) as part of the SEPP scheme, and the United States offered a federal tax rebate of up to USD 4 000 in the first half of 2025. In France, until the end of 2024, car buyers that scrapped their old diesel car could receive up to EUR 5 000 (USD 5 380) if they replaced their car with an electric or hybrid car, whether the replacement was new or second-hand.

Government support per electric car, in the form of direct purchase subsidies, tax incentives and import duty reliefs, has steadily declined over the past decade as sales have increased. This decrease in public funding started to accelerate in 2023, as governments in major markets phased out purchase incentives or tightened subsidy eligibility requirements. In 2025, government support accounted for just under 7% of total spending on electric cars globally, compared to over 12% in 201910. Despite lower per-vehicle support, growth in electric car sales globally resulted in public finance increasing in absolute terms in 2025, to reach about USD 60 billion – a roughly 20% rise from the previous year. As sales have risen, total spending on electric cars globally has grown continuously, to reach about USD 860 billion in 2025.

Tax exemptions dominate government support in China but will tighten from 2026

Government spending in China accounted for nearly 60% of the global total in 2025. Scrappage and trade-in schemes were largely continued in 2025, with 18.3 million applications filed in 2024 and 2025, accounting for nearly 40% of car sales over the same period. The 10% purchase tax exemption for electric cars remains the primary source of government financial support for buyers. In 2025, the purchase tax exemption represented more than 90% of Chinese government support, in the form of foregone revenue.

However, starting from January 2026, policy updates reducing access to new energy vehicle (NEV) purchase incentives are expected to significantly reduce government spending. Firstly, the preferential purchase tax policy for NEVs entered a new phase in 2026, in which the full exemption has been replaced with a 50% tax reduction, linked to vehicle energy consumption for BEVs and electric range for PHEVs, reducing both the scope of eligibility and levels of support. Similarly, trade-in and scrappage schemes are moving away from a fixed subsidy amount to price-capped and energy-efficiency-linked incentives, further reducing per-vehicle government spending in 2026.

Electric car sales growth and tax exemptions offset declining subsidies in Europe

Despite several countries in Europe having reduced or phased out purchase subsidies in recent years, especially for middle- to high-income households, increasing electric car sales pushed government support to a record high of over USD 11 billion in 2025, up more than 40% from the previous year. Belgium, the Netherlands and Austria all ended their purchase subsidy schemes in December 2024. This followed the end of subsidy programmes in the United Kingdom, Sweden and Finland in 2022, the phase-out of subsidies in Germany in 2023, and a scale-back of subsidies in France in 2023.

However, measures in some other European countries also contributed to higher regional spending in 2025. The United Kingdom reinstated purchase subsidies in 2025 with the GBP 650 million (about USD 830 million) “Electric Car Grant”, supporting the sales of a few eligible electric models priced below GBP 37 000 (about USD 47 000). Italy doubled per-vehicle support through the revised “Eco bonus,” which targets lower-income households scrapping older vehicles. In Spain, strong growth in electric car sales increased the fiscal cost of the extended “MOVES III” subsidy programme. The launch of the “NaszEauto” EV subsidy scheme in Poland also contributed to government spending in Europe in 2025, albeit to a negligible extent, as its electric car market remains relatively small.

Since 2022, the reduction in purchase subsidies seen in major European markets has been offset by increasing support (via foregone tax revenues) in countries where electric cars benefit from significant registration tax exemptions, namely Denmark, Türkiye and Norway, which have seen soaring EV sales. In Türkiye, the ÖTV registration tax has been reduced from 80% of the list price for conventional cars to 10% for BEVs priced below TRY 1.45 million (Turkish liras) (roughly USD 35 000) and less than 160 kW, rising to 60% for other models. In July 2025, the ÖTV tax structure evolved, setting a minimum 25% rate for BEVs priced up to TRY 1.65 million (roughly USD 40 000), and a maximum 75% rate for pricier and more powerful models. Similarly, in Denmark, BEV buyers pay only 40% of the up to 150% progressive vehicle registration tax for conventional cars. Norway maintains sizeable tax incentives, with a VAT exemption on the first NOK 500 000 (roughly USD 46 500) of the BEV price (although this will be reduced in 2026) and exemptions from most components of the vehicle registration tax, which for conventional and hybrid cars is based on CO2 emissions, nitrogen oxides (NOx) emissions and vehicle weight. As a result, the distribution of government support for electric car sales across Europe shifted significantly in 2025. Despite representing less than 15% of electric car sales in Europe’s 15 largest markets, Denmark, Türkiye and Norway together accounted for over 75% of government support in 2025, up from above 25% in 2022.

In 2026, government support across Europe is likely to increase further as some countries reinstate their purchase subsidy programmes. Germany has reintroduced subsidies supported by a EUR 3 billion (USD 3.2 billion) budget envelope, with subsidies linked to household income and vehicle price. Sweden and Italy also renewed their EV purchase subsidy programmes in 2026.

US EV purchase support ends after the phase-out of tax credits

In the United States, the One Big Beautiful Bill Act (OBBBA) ended the Clean Vehicle Tax Credit after September 2025. Given that some consumers rushed to purchase electric cars before the tax break ended, the effect on full-year spending by the federal government was rather muted. In 2025, US government spending totalled less than USD 3 500 per electric car, nearly 40% lower than the USD 5 500 peak observed in 2022. This decreasing trend was driven by the tax credit eligibility shifting from a broad deployment incentive to a more targeted industrial policy tool between 2022 and 2025. In 2022, eligibility was mainly restricted based on battery size and manufacturer caps. From 2023, the Inflation Reduction Act (IRA) removed the manufacturer caps, introduced a North American assembly requirement, and split the USD 7 500 credit into two parts tied to battery components and critical minerals, resulting in partial eligibility for some models. In 2024 and 2025, tighter sourcing thresholds and “foreign entity of concern” rules further restricted eligibility, narrowing the pool of qualifying models. In the absence of the tax credit, there is expected to be virtually no government financial support for the purchase of electric cars in 2026.

Import duty exemptions underpin EV support in Southeast Asia

In Southeast Asia, most government support for electric car sales took the form of import duty exemptions and registration tax relief. Thailand is the only country offering purchase subsidies, through its EV3.5 scheme. The country also granted import duty exemptions (which ended in December 2025) and excise tax exemptions for electric cars from carmakers committing to begin producing in Thailand by 2026. Since 2022, Thailand, Indonesia, Malaysia and the Philippines have primarily relied on trade-related policy tools to support electric car uptake, while Viet Nam and Singapore have focused on registration tax reliefs. Thailand, Indonesia and Malaysia all have large domestic car manufacturing bases, and levy high import duties on cars to encourage domestic production.

In 2025, foregone revenues linked to import duty reliefs in Southeast Asia represented nearly half of the roughly USD 6 billion in government support for electric car sales. Overall, the absolute amount of government support more than doubled year-on-year as a result of soaring sales. Per-vehicle support is expected to decline in 2026 as most tariff exemptions are set to expire or to see their eligibility criteria tighten as incentives are increasingly linked to domestic production. The Philippines is a notable exception, as its import duty exemptions are expected to remain in place through 2028 based on current policies.