Electric vehicles saw a global surge in 2025, but the U.S. faced a different trend. Global sales increased by 20% to 20 million units, with one in four new cars sold worldwide now electric, based on the International Energy Agency’s annual outlook. In the U.S., however, EV sales declined by 2% last year, creating a clear divergence. The gap widened as gasoline prices climbed to $4 a gallon in April, yet consumers had fewer affordable options. Chinese EVs, which dominate elsewhere, face 100% tariffs in the U.S., while all imported vehicles also encounter a 25% duty.
Egor Prokhodtsev of Wood Mackenzie explained that the issue stems from supply constraints rather than gas prices. A $7,500 rebate that made EVs more accessible expired last September. This, along with tariffs on imports, limited U.S. buyers’ choices. Domestic automakers lack models priced similarly to the Chinese cars driving global growth. The result was a 36% drop in fourth-quarter 2025 sales and a 27% decline in first-quarter 2026 sales, according to Kelley Blue Book.
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In contrast, the EU and Canada welcomed Chinese EVs. The EU allowed sales if prices met minimum thresholds, and Canada reduced tariffs to 6.1% with a yearly import cap of 49,000 vehicles. In 2025, EV sales rose over 30% in Europe, 80% in Asia-Pacific markets outside China, and 75% in Latin America. The Middle East conflict also accelerated EV adoption, as petrol prices jumped 45% in the UAE between March and May. Chinese firm BYD saw inquiries nearly double in that period.
U.S. sales lagged behind. EVs accounted for only 5.8% of new vehicle sales in the first quarter of 2026, half the share from six months earlier. David Hart of the Council on Foreign Relations warned the U.S. risks being cut off from affordable models reshaping other markets. “Consumers will eventually notice what they’re missing,” he said, citing border crossings and international travel as potential wake-up calls.
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Not all experts agree the U.S. is falling behind. Stephen Ezell of the Information Technology and Innovation Foundation pointed out Chinese automakers’ cost advantages come from state subsidies and trade practices. He noted South Korean, Japanese, and European firms are developing affordable EVs for the U.S. “U.S. policy isn’t necessarily isolating the auto industry from global innovation,” Ezell said. “Other automakers will still compete aggressively.”
Industry partnerships suggest possible solutions. Stellantis, maker of Jeep and Peugeot, is collaborating with Chinese firms Leapmotor and Dongfeng to build lower-cost models for Europe, Southeast Asia, and Latin America. “Fight the Chinese with help from the Chinese,” said Lei Xing of AutoXing, describing the approach. “It’ll be hard to compete on price without some collaboration.”
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Canada’s new rules, requiring half of a vehicle’s parts to be locally made, may limit which models reach dealerships. Meanwhile, Chinese firms like Chery and Geely have already shipped vehicles to Canada under the new arrangement. As the U.S. grapples with tariffs and limited options, domestic automakers must close the gap. Alternatively, consumers may eventually seek alternatives abroad.