Amid policy U-turns and market tensions across the world, China races ahead, the US slows, and a recalibrating EU bets on cheaper small EVs to keep electrification alive.
The global shift to electric vehicles (EVs) is no longer unidirectional, according to a recent article by Counterpoint Research. Policy differences, changing market conditions and strategic resets are fragmenting the EV transition worldwide.
China now leads decisively with EVs accounting for more than 50% of its total passenger vehicle sales. The US is losing momentum amid weakened policy support and rising uncertainty among manufacturers. The European Union is pursuing a middle path. It is softening its 2035 phase-out of internal combustion engines while pushing affordable small electric cars through a new M1E category.
Comparing the regions, the report highlighted that China’s EV growth is now driven by the market rather than subsidies. Fierce local competition, oversupply and price wars are pushing Chinese brands to expand globally with cheaper, feature-rich EVs.
In contrast, the US faces stalled progress. The rollback of federal incentives and potential dilution of emission rules have undermined confidence. Several automakers are delaying EV plans, reviving hybrids and ICE (internal combustion engine) vehicles and even pausing battery projects. The US and Canada have also imposed 100% tariffs on Chinese EVs. Analysts warn this could delay America’s EV transition by years, although policy momentum may revive beyond 2028.
The EU is trying to balance climate goals with industrial reality. The automotive sector generates approximately €1 trillion in value and accounts for nearly 7% of EU GDP. The bloc now proposes a 90% reduction in emissions by 2035 rather than a full ban on ICE vehicles. Hybrids, range-extended EVs, and some ICE models may continue to be available if emissions are offset.
At the same time, the EU is introducing the M1E class for compact EVs with a length of less than 4.2 metres. Each EU-built M1E vehicle will earn 1.3 “super credits”, encouraging local production and affordability.
This divergence is forcing global automakers to regionalise production, allocate investments, and absorb higher costs. Some companies, including Ford, which reported losses of approximately $19.5 billion, are already experiencing strain.
