Global EV growth is diverging, and ESS becomes the stronger theme

Overview

This report tracks global EV/PHEV, traction battery, and ESS market performance in June 2026. The core conclusion is that EV demand is not recovering uniformly; rather, it is diverging with strong Europe, structurally resilient China, and weak U.S. demand. Meanwhile, ESS has become a clearer growth sweet spot as it is supported by data center electricity demand, on-site microgrids, and U.S. FERC policy changes.

Core views

European EV/PHEV penetration continues to rise rapidly, with improvements across all major EU-5 markets; in China, despite weak passenger car demand, NEV penetration remains high, while rural subsidies are viewed more as a stabilizer than a demand inflection point; U.S. EV sales and penetration continue to decline year over year. On investments, the report favors battery manufacturers and leading OEMs with ramping capacity, strong order books, and pricing power, and views ESS demand from AI data centers as a potential long-term catalyst.

Analysis framework

The report combines regional sales and penetration tracking, OEM market-share comparison, battery-chain stock performance, policy catalysts, and company-event analysis, comparing EV/PHEV demand shifts across EU-5, China, and the U.S., while assessing the impact of FERC policy, data center power interconnection approvals, ESS supply bottlenecks, and order migration in Korean and Chinese battery chains on the industry and stock positioning.

Methodology notes

• industry demand trackingregional EV/PHEV sales and penetration comparison

  Track regional demand momentum through sales, year-over-year, month-over-month, and penetration.

  The report compares EU-5, the U.S., and China on a consistent basis, identifying a differentiated pattern of strong Europe, improving Chinese penetration but weaker total demand, and weak U.S. demand.

• policy and infrastructure catalystsFERC grid queue reform and BTM storage analysis

  Policy shortens the power-approval cycle for data centers and lifts ESS attachment rates.

  FERC-related orders could compress data center power-approval timelines from several years to around 90 days; combined with interruptible transmission service and ESS deployment, this is expected to strengthen U.S. storage demand.

• stock positioningpricing and execution capability comparison across the supply chain

  Compare the relative attractiveness of battery makers, materials suppliers, and upstream resource companies within the battery chain.

  The report favors battery makers such as LGES/SDI, judging them to have greater pricing power and execution certainty than materials and lithium-resource companies.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hyundai Motor Company

  South Korean automaker, a preferred name in the report

  Strengths

  Benefits from a higher HEV mix and resilient profitability.

  Weaknesses

  Still exposed to global auto demand and regional EV growth divergence.

  Comparison

  The report treats Korean automakers as one of the relatively preferred positioning areas.

  Risks

  Weaker consumer demand, FX, intensifying competition, and weak U.S. EV demand.

• Kia Corp

  South Korean automaker, a preferred name in the report

  Strengths

  Improving HEV mix supports earnings resilience.

  Weaknesses

  Slowing EV demand could reduce valuation elasticity.

  Comparison

  Belongs to the same preferred Korean OEM direction as Hyundai Motor in the report.

  Risks

  Global auto demand, product cycles, and price competition.

• LG Energy Solution

  Korean battery manufacturer, report preference for battery makers over materials suppliers

  Strengths

  ESS packaging bottlenecks are expected to ease by 3Q26, and the Ultium factory restart plan is expected in 3Q.

  Weaknesses

  2Q operating profit was somewhat below expectations, OEM compensation was limited, and AMPC was weaker than expected.

  Comparison

  The report prefers battery makers such as LGES/SDI, relative to materials and lithium resource firms.

  Risks

  U.S. EV battery ramp execution, ESS capacity execution, order backlog conversion, and subsidy uncertainty.

• Samsung SDI

  Korean battery manufacturer, rated OW

  Strengths

  Benefits from relatively strong pricing power in cell manufacturing and growing ESS demand.

  Weaknesses

  Segmented demand and ongoing capacity ramping continue to affect near-term earnings.

  Comparison

  Along with LGES, it is listed as a favored direction in the Korean battery chain relative to materials suppliers.

  Risks

  ESS ramp not materializing as expected, customer order delays, and increasing competition.

• BYD-A/H

  Chinese auto and New Energy Vehicle leader, preferred name in the report

  Strengths

  Strong global expansion execution and overseas capacity ramps provide growth support.

  Weaknesses

  Weakness in China’s passenger car demand could weigh on domestic sales.

  Comparison

  On China coverage, the report puts BYD-A/H alongside CATL as preferred names.

  Risks

  Localization progress overseas, trade policy, price competition, and consumer confidence.

• CATL-A/H

  Chinese EV and ESS battery leader, preferred name in the report

  Strengths

  Maintains technical and leadership position in global EV and ESS battery markets.

  Weaknesses

  U.S. ESS procurement is shifting toward Korean and Japanese suppliers, which may affect opportunities in certain regions.

  Comparison

  The report identifies CATL and BYD as the core preferred Chinese assets.

  Risks

  Geopolitical policy, overseas market access, customer sourcing shifts, and battery price pressure.

• Ecopro BM

  Korean cathode materials company, neutral stance in the report

  Strengths

  Strengthens upstream integration through the Indonesia BNSI nickel smelting project.

  Weaknesses

  The report sees deeper nickel upstream integration as increasing flexibility, pricing, and policy risks.

  Comparison

  Compared with battery makers, materials segments are viewed as relatively less prioritized.

  Risks

  Reduced flexibility in LFP opportunities, nickel price volatility, and Indonesian policy controls.

Key data

• June EU-5+U.S.+China EV/PHEV salesabout 1.4 million units, +10% y/y, -2% m/mOverall penetration was 36%, with year-over-year and month-over-month penetration each up about 2 percentage points.
• EU-5 June EV/PHEV penetration34.5%Up 8.6 percentage points year over year; major markets including Germany, France, and the UK all improved notably.
• U.S. June EV/PHEV penetration6.6%Down 2.9 percentage points year over year; 6M26 penetration was 6.8%, down 2.8 percentage points year over year.
• China June NEV retail sales and penetrationabout 1.0 million units, penetration 62.9%Sales were down 9% year over year and up 6% month over month; the data is based on CPCA preliminary retail figures.
• U.S. 2030 ESS demand forecast303GWhThe report raised the forecast by 52%, with data centers expected to account for 45% of total 2030 demand.
• Asian EV supply chain performance over the past monthKorea -12%, China -8%, Japan +8%Within subsegments, cathode materials (-13%) and battery foil (-11%) were weaker, while electrolytes (+1%) outperformed.
• U.S. ESS supply chain migrationShipments from Korea/Japan were up more than 200% year over year, while Chinese suppliers’ U.S. ESS shipments were down 40% year over year in MayThis indicates U.S. ESS battery procurement is shifting quickly toward non-Chinese suppliers.

Impact & implications

At the industry level, the divergence in EV demand means a strategy based on uniform global EV recovery is insufficient; regional policy, consumer confidence, and model supply must be distinguished. ESS has stronger medium-to-long-term demand visibility due to AI data centers, microgrid deployments, and U.S. power-approval policy reforms. At the stock level, battery makers with ESS ramp capability, overseas customer orders, and technical leadership, as well as OEMs with strong global execution, stand to benefit most; materials and upstream integrated companies face risks from pricing, policy, and flexibility.

Risks

• Persistent weakness in U.S. EV demand, with penetration and sales continuing to decline year over year.
• Weak passenger vehicle demand and insufficient consumer confidence in China, making NEV policy more stabilizing than a demand turnaround.
• Slower ESS capacity ramping or ongoing packaging bottlenecks, which could weaken near-term earnings catalysts.
• Battery material companies face risks from price volatility, upstream integration policy risk, and technology-routing shifts.
• Potential delay in the implementation of data center power approvals, FERC policy, or interruptible transmission service.
• De-globalization of U.S. ESS supply from China could alter regional shares among global battery manufacturers.

What to watch

• ESS ramp, order backlog, and earnings improvement among battery makers during 2Q earnings season.
• Progress on LGES U.S. EV battery ramp, OEM compensation, ESS production bottleneck relief, and Ultium factory restart.
• Actual impact of FERC grid queue reforms on data center power-approval timelines and ESS attachment rates.
• Sustained support to EU-5 penetration from European subsidies, cost-competitive EV models, and China OEM localization.
• Whether Chinese rural NEV subsidies can shift from structural support to genuine demand improvement.
• The sustainability of continued market-share gains for Korean and Japanese suppliers in the U.S. ESS market.