Global demand for electric vehicles rose for a fifth consecutive month in July, driven by growth in Europe despite weakening sales in China and North America. Sales of battery-electric and plug-in hybrid vehicles rose 9% from a year ago to 1.85 million units in July, bringing year-to-date volumes to 11.5 million vehicles. High gasoline and diesel prices, driven by the conflict in the Middle East, pushed many drivers to electrify. China’s EV sales declined 5% to 980,000 vehicles in July, while its electric vehicle and plug-in hybrid exports grew 147.8% year-on-year.
EV sales in Europe rose 33% to 450,000 units, pushing year-to-date growth to 28%, as Europe continued its EV subsidies. Several of Europe’s largest auto markets brought back or expanded EV subsidies over the past 18 months. For example, Spain, where EV sales are up 34% this year, opened its new Auto+ incentive program on August 4. Buyers can receive up to €4,500 ($5,190), and they can apply retroactively for purchases dating back to January 1. In July, EV growth in Europe’s larger economies, France, Germany and Britain, was 81%, 46% and 43%, respectively.
The fastest growth in EV sales came from what the IEA calls the “Rest of the World (every place except the United States, China and Europe),” where July sales nearly doubled to 280,000 vehicles. Sales in those markets reached 1.7 million through July – up 96% year over year. According to the International Energy Agency (IEA), growing EV markets include Brazil, Mexico, South Korea, Thailand, and Vietnam. Altogether, Rest of World EV sales growth has outpaced other markets for several years.
North America’s EV sales dropped 27% to 140,000 vehicles in July, following the end of U.S. EV tax credits, which the United States ended on September 30, 2025, as part of the legislative actions in the One Big Beautiful Bill Act that passed earlier in that year. Sales through the first seven months reached 900,000, down 18%. July sales fell more than 30% year over year due to the loss of the federal EV tax credit, reduced Biden-era regulations that forced sales of electric vehicles, and elevated sales last summer before the Trump administration ended the federal EV tax credit.
The impact of the Iran war on EV sales is more constrained in the United States than in Europe and the Rest of the World because fuel prices are lower in the United States than in Europe and other regions, due to the country’s domestic production and comparatively low fuel taxes. U.S. hybrid vehicle sales, however, have risen since February, peaking at 17.4% in May, up from 13.9% in February before the war began.
Canada may see an increase in EV sales from Chinese automakers as it lowered steep import taxes on tens of thousands of Chinese electric vehicles and is allowing a limited number of those vehicles to enter its market. Mexico, at the Trump administration’s urging, imposed a 50% tariff on Chinese autos. While the tariff took effect on January 1, Chinese brands accounted for 17% of new vehicle sales in Mexico in the first half of the year, up from 14% a year earlier, with sales increasing to 137,525 from 107,712. According to Mexico’s Deputy Foreign Trade Minister Luis Rosendo Gutierrez, the sales data is misleading because Chinese automakers began the year with sizable inventories in Mexico after front-loading shipments ahead of the tariff increase. In reality, imports of Chinese-brand vehicles fell 43% during the first five months of the year compared with the same period last year.
China’s Auto Market
China’s car sales fell for a 10th straight month in July, though the rate of decline eased, contrasting with strong export growth as Chinese automakers use overseas expansion to offset competition in China — the world’s largest auto market. China’s car sales dropped 21.1% in July from a year earlier to 1.47 million vehicles, while exports rose 88.2% to 923,000. Electrek’s breakdown of China’s July sales found that battery electric vehicle sales actually rose 6% year over year while plug-in hybrid sales fell 21.1%, extended-range EV sales dropped 16.5%, and gas car sales dropped 44%. Elevated fuel prices hurt demand for gasoline-powered vehicles more than for other vehicles. In the first half of this year, China’s domestic car sales fell by 2.3 million vehicles from a year earlier, a 20% drop.
Chinese automakers are using exports to offset lower domestic sales. They are able to find growth outside of China due to their excess manufacturing capacity spurred by government incentives, highly competitive supply chains, and increasingly sophisticated products, often tailored to the market sought. BYD, the world’s largest manufacturer and seller of electric vehicles, for example, has offset a 35% drop in domestic sales during the first seven months of the year with overseas sales surging 79% year-on-year. Brazil and Britain are BYD’s largest country markets outside China in 2026. Chinese brands account for nearly a quarter of Europe’s EV shipments, and Chinese automakers are even moving beyond exports and building factories in Europe.
Conclusion
Global EV sales rose 9% in July as higher oil prices from the conflict in the Middle East have given electric vehicles a boost over gasoline-powered vehicles. Despite their overall rise, North America and Chinese auto markets saw a decline in battery-electric and plug-in hybrid vehicles. North America’s EV sales dropped 27% to 140,000 vehicles in July, following the end of U.S. EV tax credits. July sales in North America fell more than 30% year over year due to the loss of the federal EV tax credit, a weakened regulatory environment, and elevated sales last summer before the federal EV tax credit was ended by the Trump administration. EV sales in Europe rose 33% to 450,000 units, pushing year-to-date growth to 28%, as Europe continued its EV subsidies. China’s domestic EV sales declined by 5% to 980,000 vehicles in July, while its electric vehicle and plug-in hybrid exports grew 147.8% year-on-year. Chinese brands account for nearly a quarter of Europe’s EV shipments, and Chinese automakers are even moving beyond exports and building factories in Europe.
