By Pritu Makan
The global electric vehicle (EV) industry has transitioned from a niche, policy-driven segment into a central pillar of the automotive and energy transition. Rapid technological improvement, steep declines in battery costs, and expanding policy support have combined to accelerate EV adoption across both developed and emerging markets. At the same time, batteries, once the primary cost barrier, have undergone a dramatic transformation, reshaping the economics of transport and enabling large-scale electrification.
Although adoption rates vary significantly across regions, EVs are on track for another record year in 2026. This is supported by declining lithium-ion battery costs, the launch of more affordable models, and strong demand in emerging economies, particularly for competitively priced vehicles from Chinese manufacturers. EVs, battery-electric and plug-in hybrid EVs (PHEV) combined, are expected to account for ~28% of global passenger vehicle sales this year, a dramatic increase from less than 5% just six years ago. Based on recent data from the International Energy Agency (IEA), more than 100 countries recorded electric car sales growth in 2025, and in one-third of these, they represented at least 10% of new car sales - a critical tipping point where organic consumer demand increasingly drives adoption, reducing reliance on government incentives and signalling a transition toward mainstream acceptance of electric mobility.
The EV market is currently dominated by two major platers, Tesla and BYD. Tesla's long-standing dominance in the global EV market was overtaken by Chinese automaker BYD. While being close to par with Tesla in terms of vehicle production during 2024, BYD widened the gap meaningfully in 2025, ramping up production while also focusing on global distribution. BYD's global EV sales rose ~28% year-on-year (y/y) to 2.26 million units, while Tesla's deliveries fell ~6.5% to 1.66 million vehicles, reflecting the impact of reduced EV incentives in certain markets and intensifying competitive pressures across the industry.
Accelerating global EV adoption
EV adoption has reached a critical inflection point with global sales exceeding 20 million units in 2025, representing a double-digit y/y increase and accounting for roughly 25% of all new car sales worldwide. This indicates that EVs have moved beyond early adopters and are now entering mainstream markets globally.
The global transition reflects a structural shift from concentrated adoption in a few advanced economies to a more globally distributed trend. According to recent data from the IEA, China solidified its position as the global leader in EV manufacturing in 2025, producing around 75% of the world's electric vehicles. Strong domestic manufacturing and competitive pricing have enabled rapid adoption, with many EVs now cheaper than conventional vehicles in several segments. However, intense competition and rapid market saturation in China has pressured profit margins, prompting manufacturers to expand internationally. As a result, Chinese EV exports more than doubled to over 2.5 million vehicles as production exceeded domestic demand. China, which surpassed the European Union (EU) as the world's largest car exporter in 2024, saw EVs account for 35% of total car exports in 2025, up from 20% in 2024. Chinese brands are also rapidly gaining global market share, with Chinese imports representing 55% of EV sales outside Europe and the United States (US), compared with less than 5% five years ago. In Southeast Asia, Chinese manufacturers accounted for more than half of EV sales, highlighting their growing dominance in emerging markets.
In terms of the other major regions, Europe has seen the fastest growth among major markets, with EV sales rising by over 30% to reach 28% market share, driven largely by stringent emissions regulations. Adoption rates in the US remains slower, with EVs accounting for just under 10% of car sales, influenced by policy variability and incentive changes. Elsewhere, emerging markets represent the next major growth frontier. Southeast Asia saw EV sales more than double (led by Vietnam, Indonesia and Thailand), while Latin America, led by Brazil and Mexico, experienced 75% growth on the back of falling prices and increased imports of affordable vehicles.
Locally, South Africa's EV market is also undergoing a notable shift as rising fuel prices and changing consumer preferences drive demand beyond the traditional luxury segment according to Forbes Africa. Chinese automaker BYD is emerging as a major beneficiary of this trend, with March 2026 sales reaching 589 units - almost matching Mercedes-Benz's 595 units sold during the same month. The growth is being supported by strong demand for PHEVs, which accounted for 50% of BYD's sales in the first quarter of 2026. This aligns with broader industry trends, as South African PHEV sales surged from 738 units in 2024 to 2 808 units in 2025, representing a 280% y/y increase and highlighting growing consumer appetite for more affordable and practical electrified vehicle options. Overall, the arrival of value-focused brands such as BYD and Geely, including the launch of the Geely E2 at ~R340 000, alongside the rollout of new charging infrastructure on key transport nodes, is making EV ownership increasingly accessible to a broader segment of consumers. As a result, South Africa's EV adoption story is evolving beyond environmental considerations, increasingly reflecting consumers' desire for greater energy independence, lower operating costs and resilience in an increasingly uncertain energy environment.
Looking ahead, EV adoption is expected to continue rising. Global sales are projected to reach 23 million units in 2026, accounting for 28% of total car sales. Over the longer term, the global EV fleet could expand more than sixfold to over 500 million vehicles by 2035, even without additional policy measures. Regionally, Europe is set for the largest growth among major markets, with sales projected to increase by around 20% in 2026, such that one in three cars sold are electric. In China, electric car sales are expected to grow across 2026, albeit at a slower rate than in previous years, to reach almost 60% of total car sales. Sales across Asia Pacific countries other than China are expected to grow by over 50%, while sales in Latin America are projected to rise by 45%.
A key driver of this growth is the economic advantage of EVs. With higher fuel prices and increased awareness of operating cost savings, EVs are becoming attractive not just environmentally but financially. In many regions, the cost savings from electricity versus gasoline has widened significantly, especially during periods of elevated oil prices. Moreover, electrification is expanding beyond passenger cars, with electric trucks and two- and three-wheelers gaining further momentum. These developments indicate that electrification is spreading across the entire transport ecosystem, from light-duty mobility to heavy freight.
Looking ahead
The long-term outlook for EVs remains highly positive. Even without additional policy support, the global EV fleet could expand more than sixfold to reach over 500 million vehicles by 2035, with EVs accounting for ~50% of global car sales. However, several challenges remain with some of the key risks being:
Despite these challenges, the structural drivers of EV growth, including cost competitiveness, policy alignment, and technological innovation, remain firmly intact.
Overall, the global EV revolution has shifted from a future prospect and has now become a present reality. Record adoption levels, historically low battery costs, and rapid technological progress are converging to reshape the automotive and energy landscapes. However, as highlighted at the BloombergNEF Summit 2026, the path forward is becoming more uneven, marking a shift from rapid expansion to a more complex, maturing phase of growth.
Sources: BloombergNEF, IEA, PwC, Nomura, Our World in Data, Forbes Africa
