EV Market Hits Speed Bump: China Sales Slide 20%, US Sees Worst Month Since 2022

Electric vehicle sales worldwide saw a notable decline in January 2026, largely due to a significant drop in the Chinese market, which has been a major player in the EV sector. This downturn is attributed to new taxes and reduced incentives that took effect at the beginning of the year. Global EV Sales Decline According to a report by Electrek, global electric vehicle sales in January 2026 reached 1.2 million units, marking a 3% decrease year-over-year and a 44% drop from December 2025. US Records Low Sales In contrast, North America experienced a challenging start to 2026, with EV sales dropping 33% year-over-year. The U.S. saw its lowest monthly EV sales since early 2022, following the end of federal EV tax credits in September 2025. Automakers such as Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA) have adjusted their strategies, incurring significant write-downs. China's EV Policy Changes The decline was primarily driven by a significant downturn in China, the world’s largest EV market, amid policy changes. Sales fell 20% year-over-year and 55% from December, according to data from consultancy Benchmark Mineral Intelligence. China’s policy changes include a 5% purchase tax on EVs, a shift from tax exemptions since 2014, and a less generous trade-in scheme. These factors have contributed to a more market-driven environment for China’s EV sector in 2026. This follows a challenging year for Tesla in China, where the company faced its first annual sales drop in 2025. Europe Records Increase Meanwhile, Europe showed resilience, selling over 320,000 EVs in January, a 24% increase year-over-year, despite a 33% decline from December. The region continues to push for higher sales to meet EU emissions targets, with subsidies reintroduced in key markets like the UK, Germany, and France. In Europe, EVs surpassed gasoline vehicles in market share in 2025. Outside major regions, EV sales nearly doubled, with South Korea, Brazil, and Thailand leading the growth. The expiration of federal EV tax credits in the U.S. has also contributed to declining sales. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Natee Meepian via Shutterstock