Global EV growth is diverging, with ESS becoming the strongest theme
AI summary card
Global EV growth is diverging, with ESS becoming the strongest theme
JPMorgan says that in June 2026 EV/PHEV penetration in the EU-5 continued to rise quickly, Chinese penetration held up despite weak passenger demand, and US demand remains weak; data center power needs and FERC policy changes have led to an upgrade in the US ESS demand outlook.
- EU-5 + U.S. + China EV/PHEV sales in June were 1.4 million units, up 10% year-over-year and down 2% month-over-month, with 36% penetration, up 2 percentage points year-over-year and 2 percentage points month-over-month.
- EU-5 EV/PHEV sales were up 49% year-over-year, with penetration reaching 34%; key markets including Germany, France, and the UK each improved significantly.
- US EV/PHEV sales in June were down 26% year-over-year, with penetration only 7%; demand remains weak.
- China’s June new-energy vehicle retail sales were about 1.0 million units, down 9% year-over-year and up 6% month-over-month, with overall penetration around 63%; rural subsidies function more as a stabilizer than a demand reversal.
- FERC grid queue reform and data center microgrid demand may accelerate ESS grid integration and related deployment, and JPMorgan raised its 2030 U.S. ESS demand forecast by 52% to 303GWh.
Report interpretation
Overview
This report is JPMorgan’s June 2026 monthly update on the global EV/PHEV, battery and ESS markets. The core conclusion is that global EV demand is not rebounding in sync; instead, Europe is strong, China’s penetration remains resilient despite weak headline demand, and the United States is still tepid. At the same time, ESS is becoming a clearer growth highlight, supported by data center power demand, U.S. grid approval reform, and supply-chain reconfiguration.
Core views
First, Europe is the main driver of higher EV/PHEV penetration, with EU-5 continuing to improve under subsidy policy and a broader supply of more affordable models. Second, although China’s new-energy vehicle penetration keeps rising, total passenger vehicle demand is weak and consumer confidence remains low; rural NEV subsidies in China are acting more as a structural optimizer and demand-stabilizing replacement mechanism rather than an immediate total-demand reversal. Third, US EV demand remains weak, with June sales down year-over-year, and stable oil prices may push some consumers back to ICE vehicles. Fourth, the investment case for ESS is stronger than for pure EV chains, especially as U.S. data center power approvals, interruptible transmission services, and microgrid deployment are expected to raise ESS attach rates. Fifth, in stock positioning the report prefers Korean auto OEMs, Korean battery manufacturers, BYD and CATL, and is relatively less constructive on some battery materials and lithium-related companies with lower pricing power and execution certainty.
Analysis framework
The report combines regional monthly sales, penetration, OEM share, battery supply-chain stock performance, policy changes, and company-event monitoring, comparing the EV/PHEV markets in EU-5, the US, and China, and deriving investment implications from battery deployments, ESS demand, data-center power infrastructure, and Asian battery-ecosystem valuation.
Methodology notes
Comparing regional monthly and year-to-date EV/PHEV sales, penetration rates, and year-over-year changes.
This framework is used to identify regional strength differences in new-energy vehicle demand, with the report focusing on EU-5, the US, and China.
Analyzes the relationship between grid approvals, interruptible transmission services, data center microgrids, and storage integration.
The report argues that FERC-related policies could compress data center power approval timelines from years to around 90 days and encourage ESS as a supporting solution.
Compares earnings sensitivity, execution ability, and risk among battery manufacturers, materials suppliers, lithium producers, and auto OEMs.
The report favors battery manufacturers and large-cap global execution leaders, while being more cautious on materials and upstream integration risks.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Hyundai Motor Company, Kia CorpPreferred Korean auto OEM targets
- Strengths
- Higher hybrid mix supports earnings resilience in autos.
- Weaknesses
- Still affected by global auto demand and regional competition.
- Comparison
- The report is more constructive on Korean auto OEMs and also prefers battery manufacturers over some materials suppliers.
- Risks
- Shifts in the mix of ICE and EV demand, FX rates, regional competition, and policy changes.
- LG Energy Solution, Samsung SDIPreferred Korean battery manufacturer targets
- Strengths
- Relatively stronger pricing power and execution capability than materials suppliers, and beneficiaries of the shift in U.S. ESS sourcing.
- Weaknesses
- LGES Q2 operating profit is slightly below expectations, and ESS capacity bottlenecks still need to be relieved.
- Comparison
- The report prefers battery manufacturers over battery materials and lithium producers.
- Risks
- ESS ramp execution may fall short, OEM compensation may disappoint, and US EV battery ramping could be uncertain.
- BYD Company Limited - A/HPreferred China EV and auto leader
- Strengths
- Strong global execution capability, with overseas production ramp providing medium- to long-term support.
- Weaknesses
- Overall Chinese passenger vehicle demand is weak, and consumer confidence is low.
- Comparison
- Among Chinese names, BYD is a preferred peer of CATL in the report.
- Risks
- Price competition, pace of overseas localization, and trade and regulatory policy.
- CATL - A/HPreferred global EV and ESS battery leader
- Strengths
- Outstanding technology capability and leading position in global EV/ESS battery markets.
- Weaknesses
- Faces regional pressure from US ESS procurement shifting toward Korean and Japanese suppliers.
- Comparison
- The report still maintains preference due to its technology and leadership position.
- Risks
- Geopolitical policy risks, changes in customer regional mix, pricing pressure, and localization requirements in supply chains.
- Ecopro BM, POSCO Future M, and selected battery materials companiesRelatively cautious names
- Strengths
- They are in critical positions within the battery materials supply chain.
- Weaknesses
- The report believes materials suppliers have weaker pricing power and execution certainty than battery manufacturers; Ecopro BM’s deeper nickel upstream integration adds risk.
- Comparison
- The report prefers battery manufacturers such as LGES/SDI; Ecopro BM is rated N, while POSCO Future M is rated UW.
- Risks
- Nickel price volatility, reduced flexibility on LFP opportunities, Indonesia policy risk, financing, and offshore expansion risk.
Key data
- EU-5 + US + China June EV/PHEV sales1.4 million units, +10% YoY, -2% MoMPenetration was 36%, up 2 percentage points year-over-year and up 2 percentage points month-over-month.
- EU-5 June EV/PHEV penetration34.5%Up 8.6 percentage points year-over-year; the main report text summarizes it at around 34%.
- China June retail sales of new-energy vehiclesAbout 1.0 million units, -9% YoY, +6% MoMBased on preliminary CPCA retail data; total passenger vehicle sales around 1.6 million, with new-energy vehicle penetration around 63%.
- US June EV/PHEV sales-26% year-over-yearPenetration around 7%, down 3 percentage points year-over-year and down 1 percentage point month-over-month.
- US 2030 ESS demand forecast303 GWhJPMorgan raised its forecast by 52%; data centers are expected to account for about 45% of total demand by 2030.
- Past month performance of Asian EV supply-chain stocksKorea -12%, China -8%, Japan +8%Among sub-industries, cathode materials were the weakest at -13%, while electrolyte was the relative winner at +1%.
- US ESS supply-chain shiftsKorea/Japan shipments to the US for ESS were up over 200% year-over-year, while Chinese supplier shipments to the US ESS market were down 40% year-over-year in MayThe report says U.S. ESS battery procurement is shifting rapidly from Chinese suppliers toward Korean suppliers.
Impact & implications
For investment implications, the EV theme requires separating regions and supply-chain position: European growth supports global leaders with globalization capacity, China’s demand still has penetration support but total recovery needs time, and the U.S. EV chain has weak near-term momentum. By contrast, ESS is likely to offer clearer catalysts in orders, capacity ramp execution, and earnings realization due to data-center power constraints, improving U.S. approval mechanisms, and supply-chain localization.
Risks
- US EV demand may remain weak, with sales and penetration continuing to be pressured.
- Weak Chinese passenger vehicle demand and low consumer confidence could limit total new-energy vehicle demand recovery.
- If ESS capacity bottlenecks do not ease, order growth may not be converted into earnings quickly.
- Uncertainty exists around the implementation of data center power approvals and FERC-related policy.
- Upstream battery materials integration may bring nickel price, policy, and capex risks.
- Regional supply-chain shifts, trade policy, and localization requirements could change competitive positioning.
What to watch
- During the 2Q earnings season, updates on battery manufacturers’ ESS ramp progress, earnings realization, and order backlogs.
- LGES Ultium plant restart in 3Q, US EV battery ramping, OEM compensation, and ESS ramp progress.
- Whether US data center ESS orders continue to materialize and whether FERC-related approval timelines materially shorten.
- The actual impact of China’s rural NEV subsidies on sales mix and total demand.
- Changes in Europe and China OEM market share and localization progress, especially production hubs in regions such as Spain.
- Whether US EV/PHEV sales show a turning point due to oil prices, subsidies, and inventory changes.