A new report finds that global car sales fell by around 5% year-on-year in 1H2026, as demand weakened in the two largest markets, China and the US, amid economic pressures, higher fuel costs and changes in policy settings.

Against this backdrop, EV sales showed a more volatile pattern. After declining in 1Q2026, global EV sales rebounded sharply in 2Q, rising 35% compared with the previous three months and reaching record levels in 50 countries.

Growth was particularly strong across emerging markets. EV sales in Australia, Brazil, India, Korea and Vietnam roughly doubled between March and June compared with the same period in 2025, while more than 90 countries recorded year-on-year increases in the first half.

Supported by this momentum and continued policy backing in Europe, Latin America and Southeast Asia, EVs are now expected to account for 29% of global car sales in 2026, slightly above previous IEA forecasts.

China remains central to global EV dynamics, although its role is shifting. For the first time this decade, EV sales there are projected to stagnate year-on-year, even as more than 60% of total car sales are expected to be electric – an all-time high.

At the same time, exports are rising rapidly. Shipments in 1H2026 nearly matched total exports for all of 2025, with only around two-thirds of those vehicles sold. Combined with existing inventory, this leaves more than one million vehicles available for sale in global markets, intensifying competition – particularly in emerging economies.

With China and other emerging markets expected to account for around 60% of global car demand over the next decade, trends in these regions are likely to play a decisive role in shaping the industry’s future, the report concludes.

Electrified vehicles dominate EU car market as fossil fuel share falls below 30%

Electrified vehicles accounted for the majority of new EU car registrations in 1H2026, according to the European Automobile Manufacturers Association.

It finds that new EU car registrations rose by 5.7% year-on-year in 1H2026, supported by a strong performance in June despite persistent geopolitical and economic headwinds.

Battery-electric vehicles (BEVs) captured 20.7% of the market, up from 15.6% a year earlier, with more than 1.2 million units registered. Hybrid vehicles remained the most popular powertrain, accounting for 37.3% of registrations, while plug-in hybrids reached a 9.8% share.

Combined, these categories of electrified vehicles represented nearly 68% of all new EU car registrations in 1H2026. By contrast, the combined share of petrol and diesel vehicles fell to 29.7%, down from 37.8% a year earlier.

Growth in BEV registrations was led by strong performances in key markets including France, Germany and Denmark, while hybrid demand remained robust in Italy and Spain.

UK EV sales surge but fall short of mandate targets

EV uptake in the UK reached record levels in July, but remained below government mandate targets, according to the Society of Motor Manufacturers and Traders (SMMT).

New car registrations as a whole rose by 11.7% year-on-year to 156,571 units, marking the eighth consecutive month of growth as the market continues its recovery.

BEVs drove the increase, with sales rising 44.5% to capture a record 27.5% market share. Plug-in hybrids and hybrid vehicles also recorded gains, SMMT data shows, taking the total share of all types of EVs in the month to 56%, versus 44% for petrol and diesel-fuelled models

Despite this progress, BEVs are expected to account for around 27.4% of total car sales in 2026 – well below the UK’s 33% mandate target. The shortfall is forecast to persist into 2027, with uptake projected at 32.1% against a 38% target.

Bridging this gap is increasingly reliant on manufacturer-led measures, including discounting and marketing support, SMMT says. While effective in sustaining growth, these strategies are adding to cost pressures and weighing on profitability across the sector.

The UK’s experience underscores a broader challenge facing the transition: strong consumer uptake alone may not be sufficient to meet increasingly ambitious policy targets, the industry body concludes.