The global electric vehicle (EV) market is shifting down a gear, with analysts projecting its slowest pace of annual growth since the pandemic disrupted sales in 2020. New research indicates that weakening consumer demand and significant policy changes in key markets are set to dramatically cool the sector's expansion next year.
A Perfect Storm of Policy and Cooling Demand
According to a report first highlighted by the Financial Times, research firm Benchmark Mineral Intelligence forecasts that EV sales will increase by just 13 per cent to 24 million units in 2026. This marks a stark deceleration from an estimated 22 per cent surge recorded last year. Experts point to a confluence of factors shaping this outlook.
The anticipated slowdown follows years of explosive, China-led growth that many believed would swiftly end the era of the internal combustion engine. A key influence is the Trump administration's move to scrap incentives for EVs in the United States. This is compounded by the European Union's decision to weaken a proposed ban on new petrol cars from 2035, and a noticeable cooling of enthusiasm among buyers in China, the world's largest EV market.
Regional Forecasts Paint a Mixed Picture
The impact will be felt unevenly across the globe. Benchmark's data reveals a particularly sharp contraction expected in the US, where sales are predicted to tumble by 29 per cent to 1.1 million vehicles in 2026. This comes after a record-breaking 2025, which saw 1.5 million EVs sold.
In Europe, growth is set to continue but at a more modest rate. Sales are predicted to rise 14 per cent to 4.9 million, following a much stronger estimated 33 per cent increase the previous year. The Chinese market, while still expanding, is forecast to see sales reach 15.5 million, up from 13.3 million in 2025. However, this projected growth is notably below the explosive trajectory of the past five years, where sales rocketed from 1.1 million to over 13 million units.
Chinese manufacturers, spearheaded by BYD—which overtook Tesla as the world's biggest electric-car maker in 2025—have been instrumental in driving European sales with competitively priced models. Their continued overseas expansion remains a significant market force.
The Hybrid Resurgence and Executive Outlook
Despite the cooling appetite for fully electric vehicles, industry executives anticipate a sustained pick-up in sales of hybrid and plug-in hybrid models. These have grown in popularity as concerns over inadequate public charging infrastructure deter some consumers from committing to a fully electric car.
Ford's chief executive, Jim Farley, summarised this sentiment to the Financial Times, stating, "Both markets are learning that partial electrification is as interesting as full electrification." Farley added that EVs' share of the new car market in the US could halve from last year's approximate 10 per cent to around five per cent in the near term.
In contrast to the struggling US market, leaders expect China's EV sector to continue growing in 2026, albeit at a slower pace than in recent years. Investment bank UBS predicts sales in China will inch up by just eight per cent this year, underscoring the broader global trend of moderated expectations for the electric revolution.
