Electric cars swept the world last year, everywhere except the U.S.

Global EV sales grew 20% in 2025 to exceed 20 million, with one in four new cars sold worldwide now electric, according to th International Energy Agency’s annual outlook, released on May 20.

EV sales in the U.S., though, fell 2% last year, according to Cox Automotive’s Kelley Blue Book, the primary tracker of auto sales in the country.

Rising fuel costs worldwide pushed consumers toward EVs at record rates. Gasoline prices in the U.S, too, rose sharply, topping $4 a gallon in April. But consumers had fewer EV options, especially in the affordable car category. The Chinese cars that have spurred EV growth in much of the world attract 100% tariffs in the U.S., which also levies a separate 25% duty on all imported vehicles.

“It is a supply-structure problem, rather than a gas-price problem,” Egor Prokhodtsev, principal research analyst for transportation and mobility at research and consulting firm Wood Mackenzie, told Rest of World. “Removing the subsidy simply made this structural issue impossible to ignore.”

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In most countries, an electric compact sedan is cheaper to own over five years than its gasoline equivalent, even without subsidies, Prokhodtsev said. But the cars delivering such savings are made in China and blocked from the U.S. market. No domestic automaker has produced an alternative at a similar price.

A $7,500 rebate that reduced the purchase price of new EVs for U.S. buyers expired last September. Between late 2024 and late 2025, the U.S. cut off the cheapest foreign models, made other imports more expensive through duties, and removed the subsidy that had made EVs more accessible for U.S. buyers.

The result was that fourth-quarter sales in the U.S. in 2025 fell 36% year on year, and dropped 27% in the first quarter of 2026, Kelley Blue Book reported. Several major U.S. automakers saw quarterly EV sales decline 60% to 70%.

By contrast, the European Union and Canada opened their markets to Chinese EVs. In January, the EU allowed Chinese automakers to sell as long as they kept prices above a minimum, and Canada allowed imports of Chinese EVs starting in March at a 6.1% tariff, down from 100%, with a yearly cap of 49,000 vehicles.

In 2025, EV sales rose more than 30% in Europe, 80% in Asia-Pacific markets outside China, and 75% in Latin America, according to the IEA’s annual outlook. In March this year, about 30 countries recorded an all-time high in monthly EV sales.

The conflict in the Middle East accelerated the switch from gasoline cars to EVs in countries where affordable models were available, the IEA report said. Brent crude prices, at about $70 a barrel when the first U.S. tariff was imposed in late 2024, have since averaged $117 in April and traded between $96 and $110 through May.

In the United Arab Emirates, where petrol prices rose 45% between March and May, BYDiBYDBYD Auto is a Chinese carmaker that became the world’s leading EV manufacturer in 2023, competing with Tesla for market share and global attention.READ MORE distributor Al-Futtaim Electric Mobility said inquiries almost doubled over the period. In contrast, EVs accounted for just 5.8% of new vehicle sales in the U.S. during the first quarter, roughly half the share reached six months earlier, Kelley Blue Book said.

The prospect of the U.S. being permanently cut off from the affordable EVs reshaping markets elsewhere is becoming real, David Hart, a senior fellow at New York-based think tank Council on Foreign Relations, told Rest of World. The divide is unlikely to close under current policies, though non-Chinese affordable EVs entering the market could offer some relief, he said.

American consumers will gradually learn what they might be missing.”David Hart, senior fellow, Council on Foreign Relations

“American consumers will gradually learn what they might be missing,” Hart said. “When they travel abroad or as a few cars cross the border into the U.S., some will get a firsthand look.”

Still, not everyone agrees that the U.S. is falling behind.

The tariffs are justified because Chinese automakers built their cost advantage through state subsidies and market-distorting trade practices, Stephen Ezell, vice president for global innovation policy at Information Technology and Innovation Foundation, a Washington-based think tank, told Rest of World. He pointed to automakers from South Korea, Japan, and Europe that are developing their own affordable EV models for the U.S. market.

“I don’t believe that U.S. policy is necessarily cutting the U.S. auto industry off from the global automotive technology frontier,” Ezell said. “That doesn’t mean that other global automakers won’t be innovating aggressively to produce price-competitive EVs.”

EV makers, including Chery and Geely, have shipped vehicles from China under the new Canadian arrangement, with cars having arrived in late April, according to Lei Xing, founder of AutoXing, a Chinese auto industry consultancy. Canada is discussing a rule requiring half the parts in each vehicle to be made locally, which could limit which models reach Canadian dealerships, he said.

Stellantis, the European automaker behind Jeep and Peugeot, has partnered with Chinese firms Leapmotor and Dongfeng to jointly develop lower-cost electric models for markets across Europe, Southeast Asia, and Latin America, where Chinese EVs dominate. The partnerships amount to an acknowledgment that no Western automaker can close the manufacturing cost gap with Chinese competitors on its own.

“Fight the Chinese with the help from the Chinese,” Lei told Rest of World, describing the Stellantis approach. “It’ll be very difficult to compete on price without some help of Chinese involvement.”