Key Takeaways
- Electric car sales grew 20% globally to exceed 20 million in 2025, and one quarter of all new cars sold were electric.
- China sold more than 13 million — six of every ten electric cars sold worldwide — lifting its domestic electric share to almost 55%.
- US sales fell to around 1.5 million. Q4 2025 ran 45% below Q4 2024 after tax credits ended, offsetting a 15% rise across the first three quarters.
- BloombergNEF put average lithium-ion pack prices at $108/kWh in 2025, down 8%, with China at $84/kWh and BEV packs at $99/kWh.
Correcting the record on where the growth came from
An earlier version of this analysis told readers that 60% of EV growth came from outside China, Europe and the United States. That is an inversion of the IEA's finding, and it is worth stating the correction precisely, because the error points in the most misleading possible direction.
The IEA's Global EV Outlook 2026, published in May, reports that "more than 13 million electric cars were sold in China in 2025 ... accounting for six out of ten electric cars sold globally." Sales outside China, Europe and the US reached 2 million, up from 1.3 million — real growth of nearly 50%, but from a base of roughly one tenth of the global market.
The chart above shows the four blocks on a single unit scale. China's bar is larger than the other three combined.
The market an EV portfolio actually addresses
This is where the unit data becomes a portfolio problem. A transition sleeve assembled from listed Western automakers, suppliers and charging companies is exposed to Europe (4.2 million units, 28% of new cars) and the United States (about 1.5 million). Together that is 5.7 million of a market above 20 million — under 30% of global volume.
The concentration is sharper than even that implies, and it is worth separating two claims that are easily blurred. The six-in-ten figure describes where cars are bought. The supply side is a different measurement pointing the same way: the IEA finds that Chinese manufacturers accounted for more than half of global battery-electric sales in 2025, and that Chinese imports made up 60% of electric car sales in emerging markets outside China. The growth in the "rest of world" bucket is substantially demand for Chinese vehicles. An investor who owns the transition through Western listings owns the smaller and slower part of it, and is exposed to Chinese competition inside that part.
The US Q4 cliff is a natural experiment in policy dependence
The American number requires care, because the annual figure conceals the event. US sales in 2025 were around 1.5 million, only slightly lower than 2024. But the composition of that year was violent: sales in the first three quarters rose almost 15%, and fourth-quarter sales came in 45% below the fourth quarter of 2024, after federal tax credits ended.
A 45% quarterly collapse following the removal of a subsidy is about as clean a measurement of policy dependence as this sector produces. It says the US electric-vehicle market, at roughly 10% penetration, had not reached the point where the product sells on its own economics. Europe, at 28% penetration, and China, at almost 55%, are further along — though Europe's own picture is uneven. The UK reached 23.4% BEV share in 2025 on SMMT figures, against a regulatory mandate target of 28%: a compliance gap, not a triumph.
Battery costs are the variable that decides whether subsidies matter
The counterweight to the subsidy story is the cost curve, and it runs through the same industrial supply chains now being bid for by data centres. BloombergNEF's December 2025 survey put the global average lithium-ion battery pack price at $108/kWh, down 8% year on year and a record low. Packs for battery-electric vehicles came in at $99/kWh — the second year below $100. Chinese packs averaged $84/kWh.
The spread inside that average is where the competitive advantage sits. LFP packs averaged $81/kWh against $128/kWh for NMC. The Chinese cost advantage is partly chemistry and partly scale, and at $84/kWh a Chinese manufacturer is buying its most expensive input at roughly two thirds of what a rival using NMC pays. That gap, not tariff policy, is what determines whether China's six-in-ten share is defensible. It is also a reminder that the energy assumptions underpinning global growth forecasts are being rewritten by manufacturing costs, not only by oil.
What the unit data cannot tell you
Units are not profits. Nothing in the IEA data speaks to margin, and an EV sold at a loss counts the same as one sold at a profit. The Chinese market's 55% penetration has been accompanied by a price war that has made much of that volume unprofitable, and a portfolio conclusion drawn from share alone would miss it entirely.
The IEA's "electric car" definition also includes plug-in hybrids alongside battery-electric vehicles, which matters for any figure quoted at the country level. Norway is the clearest trap: the IEA reports about 97% of new car sales as electric, while the Norwegian Road Federation reports a battery-electric share of 95.9%. Both are right; they measure different things, and mixing them overstates the case.
The thesis that China's position is structurally secure would be falsified by the battery cost gap closing — if non-Chinese pack prices converged toward $84/kWh, the volume advantage would stop compounding into a cost advantage. It would also be undercut if China's growth continues to decelerate: sales there grew under 20% in 2025, against more than 75% annually in 2020-24. A saturating home market is the one thing that would force Chinese manufacturers to compete harder for the 40% of global volume sold outside China.
The number that moves next
The variable worth tracking is not global EV share, which will keep rising, but the gap between Chinese and non-Chinese pack prices — $84/kWh against a $108/kWh global average. That spread is the transmission mechanism between manufacturing scale and market share, and it is the quantity that decides whether the transition remains an investable Western theme or resolves into a single-country industrial outcome that Western listings mostly observe.
This content is for informational purposes only and does not constitute financial advice. Always do your own research or consult a qualified financial adviser before making investment decisions.