The Automotive Update: Market conditions impact 2026 new EV forecast

09 April 2026

As oil and gas prices rise, what effect will this have on global light-vehicle sales? Will electric vehicles (EVs) be able to take advantage of recent geopolitical changes? Autovista24 journalist Tom Hooker and Special content editor Phil Curry explore the latest insights from Neil King, head of forecasting at EV Volumes, in The Automotive Update podcast.

In this episode, the latest EV Volumes forecast is reviewed. Autovista24 special content editor Phil Curry provides insights from King, including a global EV market outlook alongside regional projections. 

Subscribe to the Autovista24 podcast and listen to previous episodes on Spotify, Apple and Amazon Music.

Global EV forecast downgraded

With a quarter of 2026 having passed, the latest forecast from EV Volumes shows that growth in the global light-vehicle market will slow. Geopolitical developments mean deliveries could remain stable this year, while the share of EVs is expected to increase modestly.

According to the latest data, combined sales of passenger cars and light-commercial vehicles will increase by just 0.4% globally this year. This is down from the previous update, which assumed a 2.7% rise in volumes across 2026.

With increased living costs and the rising price of oil and gas, household purchasing power is being eroded. Companies are also being forced to delay investments, amid uncertainty over how long energy prices will remain elevated. This means vehicle renewal is being placed further down the list of priorities.

EVs, including battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs), are predicted to make up 24.7% of light-vehicle sales in 2026. This is down by 2.8pp compared to the previous forecast released at the end of 2025. In total, around 22.7 million electric models are expected to take to roads around the world.

This would represent modest growth of just 5% year on year. This would outpace the projected overall light-vehicle growth in 2026. However, it would also mark a lower rise following the 21.9% gain in 2025. With governments in larger markets phasing out purchase incentives and tax breaks, a slowdown is likely this year. 

The EV share is forecast to increase to 27.4% next year, then rise to 31.8% by the end of 2028. By 2030, EV Volumes predicts that this global share will rise to 40.4%, before hitting 61.1% in 2035, and reaching 80.6% in 2040.

Slowing market in Europe

The European automotive market has faced turbulent times recently. LCV demand was particularly affected by trade frictions and tariffs in 2025, with the passenger-car market following suit. In addition, continued political uncertainty and rising debt levels curtailed demand in the continent.

A wide range of geopolitical changes have caused Europe’s light-vehicle sales forecast for 2026 to be downgraded. EV Volumes believes that light-vehicle sales in Western and Central Europe will rise by a modest 0.1% this year, a drop of 1.6pp against the December 2025 forecast.

At around 15.1 million units, this is far below the 18 million light vehicles registered in 2019. Moreover, it is not expected that the European market will return to that level before 2040. The market is projected to improve by 1.4% in 2027. This increase hinges on a complex mix of regulatory and economic factors. A similar rise is expected in 2028.

More to come from EVs

This year, the EV market is expected to continue expanding, as Germany reintroduces incentives, while Spain also pushes forward with its Auto+ Plan. Additionally, Chinese carmakers are strengthening their footprint on the continent, appealing especially in price-sensitive markets.

EV sales are expected to grow 16.7% this year to 4.7 million units, taking a 31.3% share of all deliveries. BEV volumes are forecast to grow 18.4% year-on-year, accounting for 69% of EV sales in 2026. Meanwhile, PHEV sales are expected to increase by 13%.

With new model launches, lower prices, and tightening EU emissions targets, EV volumes will continue to increase in the coming years. The market share of EVs will sit at 37.4% next year, rising to 43.8% in 2028.

The EU’s Automotive Package, which introduces a revised CO2 reduction pathway and compliance mechanisms, has altered the EV Volumes forecast. Assuming its full implementation, EVs are expected to account for 57.3% of light-vehicle sales by 2030. This rises to 84.2% by 2035, and reaches 95.5% in 2040.

These projections assume emissions balancing between 2030 and 2032 and continued alignment of national policies. Several markets are expected to maintain stricter targets. The UK is currently committed to a new-car petrol and diesel ban in 2030, with zero-emission only sales from 2035.

EV popularity struggles in Northern America

In the Northern American market, 2025 sales were affected by multiple factors. This included the impact of EV tax credits ending in the US and manufacturers’ decisions to amend plans for all-electric models.

With new global inflation pressures and continuing weak vehicle demand in the region, EV Volumes forecasts that overall light-vehicle sales will decline 1.9% this year. In total, 17.8 million vehicles will be sold. Deliveries of EVs are also expected to drop by 8.1% in 2026.

This comes as Canada has recently shifted its EV strategy, removing the 100% import tariff on Chinese-made models. Additionally, 49,000 units are now allowed to enter the market under a new arrangement.

At the same time, the Electric Vehicle Affordability Program has been introduced in 2026 in Canada. The country has also seen stricter emissions standards replace the former EV sales mandate. These require carmakers to meet progressively tighter fleet‑wide pollution limits.

In the US, California is exploring a new EV incentive program to fill the policy gap after federal EV tax credits expired in 2025. Some consumers have also expressed growing interest in more affordable EV options, including Chinese models that remain unavailable due to trade barriers.

The combined BEV and PHEV share is now expected to reach 8.9% in Northern America in 2026. EVs in the US are expected to take an 8.7% hold, compared to a 10.2% share in Canada. The Northern American EV share will rise modestly to 10.1% in 2027. This will be mostly supported by Canada and the rollout of more affordable EV models.

Shares will increase to 18.9% in 2030, then reach 37.7% in 2035, before rising further to 57% in 2040. This is well below the predicted global EV share of over 80% in that year.

Domestic focus for China

China’s automotive market saw PHEVs struggle in 2025, while BEVs continued to prove popular.

The country’s government is focused on boosting domestic consumption, with support directed towards state-owned manufacturers. Yet with the March 2026 OECD Interim Economic Outlook projecting 4.4% GDP growth in the country, EV Volumes has downgraded its forecast.

New light-vehicle sales are now expected to reach 27 million units, a 1.3% rise year on year.

As the country pledges to reduce greenhouse gas emissions by 2035, many brands are continuing to launch PHEV and Extended Range Electric Vehicles (EREVs). This comes as BEVs are regaining momentum in China, bolstered by discounting strategies.

As such, BEVs are forecast to account for 62.9% of EV sales in 2026, increasing to around 70% in 2030.

In total, EVs are forecast to represent 50.2% of all light-vehicle sales in 2026, a 0.8pp drop from their 2025 share. This is projected to rise to 72.1% in 2030, before achieving an 84.7% share in 2035. In 2040, the EV hold is expected to widen to 91.1%.

Policy plans in non-Triad regions

With the increase in global energy and oil prices, the March 2026 OECD Interim Economic Outlook projects slower growth for major non‑Triad automotive markets. This includes countries such as Brazil, South Korea, and India. Alongside this, persistent energy‑price pressures are weighing more heavily on demand.

Therefore, the light-vehicle forecast for 2026 has been revised down to growth of 1.1%. With various countries and governments implementing regulations and aid for EVs, the share in this market grouping will rise.

Currently, it is estimated that electric models will make up 8.9% of the market in 2026. This would be a 1.8pp improvement from 2025.

However, budget constraints driven by economic concerns may limit future incentives and/or tax breaks. Additionally, several countries have introduced, or plan to implement, new tariffs on imported vehicles.

The EV share in the non-Triad region is projected to reach 17% in 2030, before increasing to 41.8% in 2035, and 76.8% in 2040. This means the combined EV share of non-Triad markets would surpass Northern America in 2034.