Global EV demand recovered in July, led by Europe and rest-of-world markets, while batteries outpaced vehicle sales.

Overview

Bernstein’s July tracker assesses global passenger xEV sales, battery installations, chemistry trends, regional markets, and implications for battery makers and automakers. The report sees a recovery in global demand led by Europe and rest-of-world markets, while warning that a stronger second half is needed to meet its 2026 EV-sales forecast and that regional and company performance remains highly uneven.

Core views

Global passenger xEV sales reached 1.76 million in July 2026, up 8% year on year but down 13% month on month. Year-to-date sales of 11.2 million were only 5% higher year on year, versus Bernstein’s forecast for 10% growth in 2026; therefore, the report argues that a materially stronger second half is required. Bernstein expects global xEV penetration to reach about 32% in 2026, up from 28% in 2025, and believes high gasoline prices should help demand accelerate over coming months. Regional performance was sharply divergent. China sold 948,000 xEVs in July, representing 54% of global sales, and declined 5% year on year after subsidy reductions. However, this was an improvement from a 11% decline in June and a 14% decline in the first half; Bernstein attributes the improvement to stabilising economic conditions and persistently high oil prices partly offsetting reduced subsidies, including the move from a full purchase-tax exemption to a 50% exemption. Europe sold 435,000 units, up 29% year on year, while rest-of-world sales rose 94% to 288,000 in the report’s summary and contributed 170% of global net growth; South America rose 188%. North American sales fell 33% to 112,000, the largest monthly decline of 2026, following removal of the CVC credit. Bernstein expects the year-on-year decline to bottom as comparisons normalize from September, although it expects full-year US demand to remain flat to negative. The mix continued to shift toward pure battery electric vehicles. July BEV sales rose 16% year on year to 1.26 million, whereas PHEV sales fell 9% to 508,000. BEVs represented 69% of xEV sales in both China and Europe, 81% in the US, and 80% in rest-of-world markets. At the OEM level, BYD led July volume with 261,000 units but was down 12% year on year; Tesla sold 105,000 units, down 9%; Geely sold 95,000, up 1%; and Leapmotor sold 94,000, up 95%. BMW was the strongest large European brand at 43,000 units, down 3%, while Volkswagen sold 41,000, down 8%. Battery demand grew faster than vehicles as BEV mix increased and OEMs used larger battery packs. Passenger-EV lithium-ion battery demand rose 17% year on year to 98GWh in July, and year-to-date demand was up 15%, in line with Bernstein’s full-year target. Regional battery demand was 51.6GWh in China, up 14%; 23.6GWh in Europe, up 35%; and 8.2GWh in North America, down 36%. CATL installed 37.5GWh in July, up 33% year on year, and held 38.5% market share year to date, compared with 36.4% in 2025. BYD installed 17.0GWh, up 15%, but its year-to-date share fell to 15.7% from 17.9%. LG Energy Solution installed 7.6GWh, down 18%, and Samsung SDI installed 1.7GWh, down 36%. Battery chemistry also shifted further toward LFP. LFP represented 52% of global xEV installations in July, up from 46% a year earlier, while NMC fell to 48% from 54%. China remained LFP-heavy, with LFP at 74% versus 72% a year earlier. Outside China, LFP share nearly doubled to 28% from 15%, which Bernstein views as evidence of continued expansion beyond the Chinese market. For energy storage and battery equities, Bernstein argues that the strong 2025 performance of the value chain was supported not only by EV battery demand but also by unexpectedly strong energy-storage systems demand. It expects energy-storage companies to continue performing well in 2026, though not with the same gains given higher expectations. CATL is identified as the most attractive stock in the sector because of its leading margins and returns, while Tianqi is supported by a potential lithium-price recovery. The report remains cautious on Korean battery makers over the next 6–12 months because US capacity has been underutilised as EV demand disappointed; their pivot toward energy storage and US data-centre demand offers long-term potential, but Bernstein says valuations already reflect much of that upside. Chinese autos face a cautious 2026 domestic outlook. Bernstein expects subsidy reductions, a 5% EV purchase-tax increase, pull-forward demand in 2024–25, weak consumer sentiment, macro headwinds, and material-cost inflation to pressure the market. It forecasts industry wholesale volume of 28–29 million units, down 4–8% year on year, domestic retail demand of 21–22 million, down 5–9%, and exports of 6.5–7 million, up 10–20%. Nevertheless, it expects domestic EV sales to grow about 5–10% and EV penetration to reach 61%, with exports becoming increasingly important amid intense domestic competition. European BEV momentum remains strong. June BEV sales in the EU, EFTA and UK rose 51% year on year, taking BEV share to 25.6% from 19.2% in June 2025. Bernstein notes that EU rules allowing fleet-emissions banking or borrowing over 2025–27 reduce immediate pressure to over-incentivise sales, but it has not seen a slowdown in BEV growth. Germany’s July BEV sales rose 61.7%, lifting BEV share to 29.3%. BMW’s BEV sales rose 42% and Mercedes’ rose 103%, while Volkswagen’s BEV sales increased 10% but its German BEV share fell to 12.8% from 18.8%. The report highlights Mercedes’ China-made CLA300L pricing at RMB249,000, slightly below the Tesla Model 3 Long Range, as evidence of the benefit of its China cost base. Tesla, which Bernstein does not cover, registered only 367 vehicles in Germany in July, down 67% year on year, though the report notes quarter-end delivery timing affects sequential comparisons. India’s EV market is moving to a higher run-rate but remains sensitive to policy visibility. Following renewal of the e-two-wheeler subsidy for two years, August e-two-wheeler retail volume reached 180,000, up 73% year on year but down 10% month on month from July’s record. January–August volume of 1.36 million was already ahead of full-year 2025 sales, and Bernstein sees the market on track for more than 2 million units in 2026. E-passenger-vehicle registrations reached 30,500 in August, up 50% year on year, with FY27 year-to-date registrations up 85% to 153,000. Market leadership is consolidating around incumbents: TVS, Bajaj, Ather and Vida accounted for about 75% of August e-two-wheeler sales. Tata held about 43% of August e-passenger-vehicle share, while Bernstein identifies Ather’s mass-market Konarc launch and its September deliveries as a key test of whether it can gain share against TVS and Bajaj. For Japanese automakers, Bernstein sees HEVs as the near-term support for sales and BEVs as the longer-term transition challenge. Global HEV sales rose 12% year on year to 1.002 million in July; Japanese automakers sold 580,000, up 9%, with 58% global HEV share. Toyota sold 376,000 HEVs, up 13%, and Bernstein considers HEV demand favourable for Japanese automakers’ near-term top-line growth. It projects Japanese automakers’ xEV penetration to reach 73% by 2030, including about 34% HEV and 23% BEV penetration, with approximately 296 xEV models by FY3/31 versus approximately 118 in FY3/24. Japanese automakers’ BEV market share was still only 4.1% as of July, although Toyota’s July BEV sales rose 93% to 34,000 units. The report therefore favours companies with broad multi-powertrain positioning and supply-chain exposure, while remaining more cautious on long-term xEV transition capabilities for some suppliers.

Analysis framework

Bernstein compiles monthly registration and sales data by country and OEM from multiple sources, with a one-month update lag; China volumes are retail registrations excluding exports. It then compares year-on-year and sequential xEV, BEV, PHEV, HEV and battery-installation trends by region, OEM, battery maker and chemistry, and connects those trends to policy changes, product launches, battery supply relationships, company positioning and published ratings.

Methodology notes

• Industry AnalysisSupply-demand framework

  Monthly EV and battery-demand tracking by region, vehicle type, OEM and battery supplier

  The report uses sales and installation volumes, growth rates and market shares to identify where demand is accelerating or weakening and which suppliers and automakers are gaining or losing share.

• Industry AnalysisVolume-price decomposition

  Battery demand growing faster than vehicle sales because packs are becoming larger and BEV mix is increasing

  Bernstein distinguishes vehicle-unit growth from GWh growth to show why battery demand can outperform xEV sales.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Linking EV demand and battery chemistry trends to battery makers, energy-storage companies, automakers and tyre suppliers

  The report traces how vehicle adoption, policy, larger battery packs and premium EV fitment affect different parts of the automotive and battery value chain.

Asset mapping & comparison

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

• CATL (300750.CH; 3750.HK)

  Leading beneficiary of global passenger-EV battery growth and energy-storage demand

  Strengths

  37.5GWh July installations, +33% YoY, 38.5% 2026 YTD market share, leading margins and returns

  Comparison

  Maintained a substantially larger market share than other battery makers; share rose from 36.4% in 2025

• BYD (1211.HK; 002594.CH)

  Covered Chinese EV and battery producer

  Strengths

  17.0GWh July passenger-EV battery sales, +15% YoY; rated Outperform

  Weaknesses

  July xEV sales fell 12% YoY and 2026 YTD battery share fell to 15.7% from 17.9%

  Comparison

  Second-largest battery maker behind CATL

  Risks

  Domestic competition, subsidy reductions and Chinese market headwinds

• LG Energy Solution (373220.KS)

  Covered Korean battery maker exposed to EV demand and US capacity utilisation

  Strengths

  Pivot toward energy storage may support growth from the US data-centre boom

  Weaknesses

  July passenger-EV battery sales fell 18% YoY to 7.6GWh; US capacity underutilisation and operating losses

  Comparison

  2026 YTD market share was 10.0%, below CATL and BYD

  Risks

  Near-term US EV demand weakness and valuations that Bernstein says reflect upside potential

• Samsung SDI (006400.KS)

  Covered Korean battery maker

  Strengths

  Recent KRW10tn Mercedes-Benz contract indicates continuing opportunity

  Weaknesses

  July passenger-EV battery sales fell 36% YoY to 1.7GWh

  Comparison

  2026 YTD market share was 2.3%, versus CATL’s 38.5%

  Risks

  US exposure, underutilisation and a challenging next 6–12 months

• Toyota

  Covered Japanese automaker positioned to benefit from HEV strength and a multi-powertrain transition

  Strengths

  Global HEV sales of 376K in July, +13% YoY; BEV sales rose 93% YoY to 34K; rated Outperform

  Weaknesses

  Japanese automakers remain in the early stages of BEV expansion

  Comparison

  Recognised by Bernstein as the most competitive Japanese player across HEV, BEV-platform alliances and FCEV

  Risks

  Long-term need to regain ground in the BEV market

• Michelin and Pirelli

  Covered tyre makers benefiting from EV-related premium tyre demand

  Strengths

  EV weight and torque support larger, more technical tyres; replacement demand is strongest in premium segments above 18 inches

  Weaknesses

  North American and Chinese EV-adoption slowdown is a modest headwind

  Comparison

  Both are rated Outperform, while Bridgestone and Continental are Market-Perform

  Risks

  A slower reacceleration in EV penetration in larger profit pools of Europe and North America

Key data

• Global July passenger xEV sales1.76M units+8% YoY; -13% MoM
• Global 2026 YTD xEV sales11.2M units+5% YoY versus Bernstein’s +10% full-year forecast
• July BEV sales1.26M units+16% YoY
• July PHEV sales508K units-9% YoY
• Europe July xEV sales435K units+29% YoY
• North America July xEV sales112K units-33% YoY
• Rest-of-world July xEV sales288K units+94% YoY in the report summary
• July passenger EV battery demand98GWh+17% YoY; 2026 YTD growth of 15%
• CATL July battery installations37.5GWh+33% YoY; 38.5% 2026 YTD market share
• LFP share of global xEV battery installations52%Up from 46% a year earlier; NMC was 48%

Impact & implications

Bernstein sees the data as supporting a later-2026 acceleration in global EV demand, led by Europe and rest-of-world markets, while battery demand remains more resilient than vehicle volumes. The report’s implications differ by region and company: Chinese domestic autos face pressure despite export growth, US-exposed Korean battery makers remain challenged near term, and HEV strength supports Japanese automakers while they build longer-term BEV capabilities.

Risks

• Chinese EV subsidies have been reduced and the EV purchase tax is expected to rise by 5%, potentially slowing domestic demand.
• North American EV demand remains under pressure after removal of the CVC credit, with full-year demand expected to be flat to negative.
• Korean battery makers face US capacity underutilisation and operating losses where demand has not met expectations.
• Chinese autos face weak consumer sentiment, macro headwinds, material-cost inflation and intense domestic competition.
• Indian EV volumes showed that policy visibility can affect demand at the margin.
• Battery and energy-storage valuations may already reflect much of the expected upside, according to Bernstein.

What to watch

• Whether global second-half xEV sales accelerate enough to meet Bernstein’s 10% 2026 growth forecast.
• China’s EV-sales recovery after subsidy reductions and the move to a partial purchase-tax exemption.
• Whether North American EV sales bottom after September as comparisons following credit removal normalize.
• Europe’s BEV growth pace, new-model launches and OEM incentives under the 2025–27 emissions framework.
• CATL’s market-share trajectory, LFP adoption outside China, and relative performance of Korean battery makers.
• Indian e-two-wheeler demand after subsidy renewal and Ather’s Konarc deliveries beginning in September.
• HEV demand and Japanese automakers’ progress in expanding BEV model pipelines.