Why Global EV Sales Growth Is Slowing: Decoding China’s Plateau and US Policy Shock

Is the electric vehicle revolution hitting a speed bump? After years of explosive, near-vertical growth, the latest figures are raising alarms for Western investors and automakers: global EV sales growth is slowing, hitting its weakest pace since February 2024. What gives? The answer lies in a one-two punch: market maturation in the world’s largest market, China, and a stark policy whiplash in North America. For those tracking the future of transport, understanding this deceleration is critical for forecasting 2026 and beyond.

Data for November shows global electric vehicle (EV) registrations—including both Battery Electric Vehicles (BEVs) and Plug-in Hybrids (PHEVs)—rose just 6% year-on-year, nearing 2 million units. While any growth is growth, this figure is a far cry from the hyper-growth rates seen previously. This slowdown is not uniform; it reflects deeply diverging regional stories driven by local policy and market maturity.

The China Effect: Market Maturation and Subsidy Headwinds

China, which accounts for over half of all global EV sales, is the primary driver behind the overall deceleration. November saw EV registration growth in the PRC ease to a mere 3% year-on-year, the slowest since February 2024. This signals a significant shift from explosive adoption to a more gradual saturation phase in the world’s most advanced EV market.

• Policy Sunset: The tapering or expiration of Chinese government EV subsidies toward the end of the year is expected to negatively impact consumer willingness to purchase.
• Hybrid Surge: Much of the recent growth momentum in China has been fueled by PHEVs and range-extended EVs, rather than pure BEVs, suggesting consumer preference complexity even in the leading market.
• Oversupply Risk: China is grappling with excess production capacity, putting immense pressure on local players (like BYD) to innovate or aggressively seek overseas markets—a key concern for Western incumbents.

The North American Shockwave: Tax Credit Expiration

In sharp contrast to China’s plateau, North America experienced a severe contraction. Following the expiration of the $7,500 federal EV tax credits at the end of September, the region is now on track for its first full-year sales decline since 2019.

The 42% year-on-year drop in North American registrations is dramatic, illustrating the outsized role subsidies play in driving adoption curves. Even leading players felt the pinch: Tesla’s US sales fell nearly 23% year-over-year in November, its lowest monthly volume since early 2022, despite introducing lower-priced ‘Standard’ variants to offset the loss. Estimates suggest overall US EV sales plummeted over 41% in November.

For our readers tracking US policy: The current administration’s proposal to roll back fuel economy standards further complicates the investment landscape for automakers committed to an EV-heavy future. The market is showing a clear struggle to boost demand without the incentive buffer. See our analysis on Tesla’s pricing strategy to understand how quickly incentives warp market dynamics.

Europe: Resilience Driven by Policy Pockets

Europe remains the bright spot, with registrations up 36% year-on-year, fueled by national incentive programs. However, this regional strength is masking potential underlying weakness. Industry experts suggest that many European automakers have been holding back the launch of more affordable EV models until 2025, when stricter CO2 emissions targets across the bloc come into effect, distorting the current year-over-year comparison.

What This Slowdown Means for Western Investors

The end of the easy-money era—whether via Chinese subsidy cuts or US tax credit expirations—reveals the market’s true structural demand. The slowdown is forcing manufacturers to pivot toward strategies that focus on affordability and a multi-powertrain approach, rather than pure BEV mandates.

• Affordability is King: The US experience shows that simply launching cheaper base models may not overcome a $7,500 subsidy loss, forcing automakers to re-evaluate profit margins.
• Hybrid Resurgence: The competitive strength of Hybrids (HEVs) and PHEVs is becoming more apparent as EV uncertainty rises.
• Policy Volatility: Uncertainty around upcoming elections and policy shifts (like the proposed fuel economy standard rollbacks) creates high visibility risk for long-term EV infrastructure investment.

The path to mass EV adoption is proving to be non-linear. For Western companies, the lesson is clear: the ‘easy miles’ are over. Survival will depend on strong balance sheets and product lineups that cater to fluctuating consumer confidence, rather than relying solely on regulatory tailwinds. For more on the macroeconomic forces shaping automaker investment, we recommend reading ‘The Future of Mobility: How to Master the Transition to Sustainable Transport’ by a leading industry analyst.

Source Reference: This analysis synthesizes data primarily from Reuters and Benchmark Mineral Intelligence (BMI).